Citi’s chief economist, Andrew Hollenhorst, dashes hopes of a soft landing for the US economy, predicting a recession by mid-2024. Despite apparent economic strengths like low unemployment and robust GDP growth, underlying indicators hint at trouble ahead.

While surface-level data may seem positive, deeper analysis reveals concerning trends. Labor market weaknesses, including declining hours worked and stalled hiring in sectors like restaurants, suggest impending economic strain.

Hollenhorst emphasizes the significance of the labor market, noting that sustained low unemployment is crucial for economic stability. However, indicators point to a potential rise in the unemployment rate, signaling broader economic decline.

High inflation levels persist, impacting consumer spending and confidence. Rising credit-card delinquency rates indicate financial stress among consumers, especially those reliant on floating credit-card debt.

Recent retail sales data reflects consumer hesitation, with a notable decline in activity. This downturn underscores broader consumer weakness, contributing to economic uncertainty.

Hollenhorst’s outlook aligns with sentiments expressed by other economists, such as Torsten Sløk from Apollo Management, who also doubts the possibility of a soft landing.

The US economy faces formidable challenges despite optimistic surface indicators. As economists warn of impending recession, policymakers and businesses must prepare for a period of economic turbulence.

Source: Adapted from Business Insider article “No soft landing: The US economy is going to fall into recession in the middle of 2024, Citi’s chief economist says“