- The US economy already looks like it's in a recession, Danielle DiMartino Booth says.
- The chief strategist of QI Research pointed to weakness in the job market, with layoffs rising.
The US economy is already in a downturn — and it could be following in the footsteps of China as the government assumes a growing amount of debt to prop up growth, Danielle DiMartino Booth, a veteran forecaster, says.
The chief strategist of QI Research has said for months that the US economy is already in a recession, despite Wall Street's upbeat outlook for a soft landing. But a downturn is evident in the weakening job market, Booth said, pointing to recent downward revisions in monthly job-growth figures.
The job market remains on solid footing by historical standards. The economy added a more-than-expected 303,000 jobs in March, while the unemployment rate remained near a record low.
But new payrolls were revised slightly lower for the month of February, falling to just 270,000. Meanwhile, layoffs and unemployment have inched higher in recent months, with total discharges rising to 1.7 million in February, according to the Bureau of Labor Statistics.
"These revisions, they keep pushing us back further and further from where we thought we were," Booth said in a recent interview with Fox Business. "It seems like every time companies report their earnings, they're doing it with a kicker that says, 'Hey, we're going to lay off 2,000 people or 1,500 people or whatever it is.'"
Layoffs could end up rising from 150,000 to 370,000 by the end of the year, Booth said in a previous interview.
Other economists also foresee a weaker labor market, which raises the risk of a recession. The economy could enter a hard landing by the end of the year and cause the unemployment rate to surge to 5%, David Rosenberg, a top economist, recently said.
The economy is already in a rocky position, especially considering ballooning US debt levels, Booth added. Government debt taking makes the US economy look precariously similar to China's, she said, where state-owned enterprises once accounted for as much as 60% of GDP, according to a 2019 estimate from FactSet.
"It is not different in any way, shape, or form," Booth said of the similarities between America's and China's economies. "Right now, the public sector is sucking the life out of the private sector."
Booth added: "We have to spend less as a country to let the private sector really come out and drive the economy."
The federal debt balance is at a record high of $34.5 trillion, according to Treasury Department data. Ballooning debt levels could eventually spark various problems for the economy, experts have said, including higher inflation, greater market volatility, and a lower quality of life for Americans.