Growth recessions occur when an economy enters a prolonged period of low growth – of say 0.5% to 1.5% – while also experiencing the other telltale signs of a recession, such as higher unemployment and lower consumer spending.
report from the Bureau of Labor Statistics posted a job openings number below 10 million for the first time since May 2021 – a downward trend that has been in place since December 2021, when openings peaked at 11.8 million.
Meanwhile, the U.S. Census Bureau recently reported that new manufacturing orders fell by 0.7% in February 2023. Indeed new orders declined in three of the last four reported months, and prior to that, orders growth had beenIn terms of sectors, job declines in construction – down by 9,000 – and manufacturing – down by 1,000 – are as expected, as both sectors are sensitive to interest rate increases.Other sectors posted substantial gains. Health services were up 50,800, and leisure gained 72,000.
If the April jobs report is similar to March’s, and barring any unusual events between now and its release in May, I expect the Fed to inch rates up very slowly, likely by another quarter basis point. Where this leaves the economy as the year progresses, only time – and more data – will tell. But from where I stand, the economy looks to be heading toward a downturn by the fall. The question is whether it will take the form of a mild recession – which will include periods of economic shrinkage – or whether, as I suspect, it will be a low-growth recession. Either way, it will involve some pain.
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