The Chicago Journal

US experts can’t pinpoint if recession will occur or not, opinions divided with shaky data

The United States has been battling an economic crisis for several months now, with the population fearing a recession.

The country also experienced two consecutive quarters of economic contraction, leaving many wondering if the US is already in a recession.

What the experts say

Many commented on the situation and offered different perspectives.

Steve Hanke, a professor of applied economics at Johns Hopkins University, believes the country will head into a “whopper” recession by 2023.

Stephen Roach of Yale University agrees that the country needs a miracle to avoid a 2023 recession but thinks it won’t be as deep as the early 1980s recession.

Richard Thaler, Nobel laureate in economics, sees nothing resembling a recession in the United States.

Thaler based his belief on high vacancy rates, a growing economy, and low unemployment.

Liz Ann Sonders, Charles Schwab’s chief investment strategist, says a recession is more likely than a soft landing for the economy.

However, a rotating recession may be needed to hit the pocket economy.

Steen Jakobsen, Saxo Bank’s chief investment officer, said the US is not headed for a recession in theory, not even in real terms. Moreover, recent polls reflect different views.

Mixed signals

US GDP fell 0.9% year-on-year in the second quarter and 1.6% in the first, consistent with the traditional definition of a recession.

The slowdown in growth was caused by factors such as government spending, falling inventories, and investment.

In addition, inflation-adjusted personal income and the savings rate have declined.

In the United States, the National Bureau of Economic Research officially announces whether the country is in recession or not.

The Bureau is unlikely to make a preliminary decision on the period in question.

The labor market’s fundamentals are stronger than in previous six-month periods of negative GDP since 1947.

William Foster, Chief Credit Officer of Moody’s, said the jobs-to-GDP ratio remains the most debated topic among economic commentators.

Indeed, the Fed is moving from an accommodative monetary policy to a tightening policy that includes rate hikes to fight inflation, which reached 8.5% in July.

“We’re coming out of an extraordinary period that’s not been seen before in history,” said Foster.

He also said that the National Bureau of Economic Research examines real household income, real spending, industrial production, the labor market, and unemployment—factors that indicate no signs of recession.

“The jobs market is still struggling to hire people, particularly in the services sector,” said Foster.


Despite the economic climate, Foster stressed that families still spend a lot.

However, he pointed out that they were spending at a slower rate of growth, made possible by household savings thanks to the pandemic.

Economist Joseph Stiglitz has expressed concern over the decline in real wages that workers are experiencing despite the tightening of the labor market.

Commentators are divided on which metrics to focus on and which specific sectors to pay attention to.

Peter Boockbar, an investor, says the latest real estate and manufacturing data explain why the US cannot avoid a recession.

He pointed out that the National Association of Home Builders/Wells Fargo real estate market index fell into negative territory last month.

However, Saxo Bank’s Jakobsen responded to the claims by saying:

“We still have double digit increases in the rental market. This is not going to create a recession.”

“Simply, people have enough money on the balance sheet to buy an apartment and rent it out and make 20 to 30%,” he added. “So [a recession] is not going to happen.”


Economists are divided on the risk of a US recession. And the jobs data isn’t helping