"It Will Feel Like A Recession" When Unemployment Hits 4.5% By Year-End | Bloomberg's Anna Wong
Jul 11, 2024
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Bloomberg's economic analyst Anna Wong discusses the potential recession signs with GDP growth, rising unemployment, and weak retail sales. Topics cover global economy assessment, fiscal responses to pandemic, challenges in removing Fed Chair, predictions on inflation and unemployment, wealth inequality impact on regular investors, and advice on gaining insights from small details.
Unemployment may reach 4.5% by year-end, resembling recession indicators.
Geopolitical tensions between US-China could disrupt global financial stability.
Divergence in monetary and fiscal policies raises risks for financial markets.
Deep dives
Unemployment Rate Forecast and Recession Probability
The forecast indicates the unemployment rate is expected to rise to 4.5% by the end of the year, potentially triggering recession indicators. While a higher rate is historically consistent with past recession patterns, reaching 4.5% could already feel like a recession for most Americans.
Global Financial Markets Risks
Geopolitical tensions between the US and China, particularly around the US presidential election, pose risks for global financial markets. A focus on supply chain issues, potential tariff increases, and Fed interest rate policies could impact market stability.
Macroeconomic Policy Coordination Concerns
Issues arise from the divergence between monetary and fiscal policies, potentially affecting financial market stability. The challenge lies in coordinating policies to mitigate risks of increased fiscal deficits, interest rate hikes, and inflationary pressures.
Pandemic Policy Impact on Labor Market
The discussion delves into the implications of pandemic-related economic policies on the labor market. Considerations include the effects of UI benefits, PPP loans, and workforce dynamics, highlighting the importance of policy adjustments.
Wealth Inequality and Economic Risk
Concerns about wealth disparity and its impact on economic dynamics emerge as a critical consideration. The discussion touches on the potential effects of economic policies on escalating wealth gaps and the implications for market stability and social challenges.
The US economy appears to be slowing down. Final Q1 GDP growth came in at just 1.4% and, as of this recording, Q2 GDP is currently estimated to be little better, at 1.5%.
Retail sales for May, the most recent data we have, only grew at 0.1%.
And unemployment is starting to tick up, too, rising last week to 4.1%.
Now, none of these stats are particularly worrisome on their own. But together, are they signalling rockier economic times could like ahead?
To find out, we have the good fortunate to talk today with Dr Anna Wong, Chief U.S. Economist for Bloomberg Economics. Prior to her current role, Anna also worked at the Federal Reserve Board, the White House Council of Economics Advisers, and the U.S. Treasury.
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#unemployment #jobs #recession
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