- The NBER has not yet said that the US economy is in a recession.
- But a growing number of indicators show that a downturn could soon be ahead.
- We compiled 9 charts — including 5 from a recent BofA earnings analysis — showing growing weakness.
Signs continue to build that a recession is coming.
Economic growth has now been negative for two straight quarters. Inflation — which is hurting consumer demand – has continually outpaced expectations. The Federal Reserve has said they will remain hawkish until inflation drops substantially, meaning further weight on consumer demand. And big firms are starting to show weakness: Walmart is seeing negative profit growth and Apple is reportedly slowing down hiring and spending, to name two examples.
Of course, it’s not all bad yet, and the National Bureau of Economic Research hasn’t officially labeled the current economic slowdown as a recession. Unemployment fell back to a 50-year low of 3.5% in July, according to data from the Labor Department released on Friday, and 528,000 jobs added in July far exceeded expectations. Consumer spending is also still growing, albeit at a slowing pace, and businesses’ capital expenditures remain strong.
But plenty of indicators are also starting to show that weakness is spreading throughout the economy and that a broader downturn might lie ahead. And perhaps counterintuitively, strong data from the labor market gives further leeway to the Fed to tighten policy, potentially meaning deeper economic damage down the road — and perhaps more sustained inflation right now. Stocks fell for this reason on Friday shortly after the jobs report was released.
Below, we’ve compiled nine charts that put this economic cooling on display. While they do not guarantee the US economy is headed for a severe downturn, they do paint a picture of a strong economy starting to roll over, and of the fear taking hold of businesses, consumers, and investors.