Two leading economists say that souring consumer sentiment is a leading indicator that the U.S. economy could be heading into a recession, according to the New York Post.
What is worrying consumers are jobs, inflationary prices and a resurgence of COVID-19 that they fear is the most contagious at places of work.
"We are entering a recession -- we are on the precipice of a recession," economist David Blanchflower tells the New York Post. To The Independent, the former Bank of England policymaker says that the nation already entered a recession in June, at the end of the second quarter of 2021. He says what primarily caused the dip was women without childcare or open schoolrooms to send their children to, who left or did not reenter the workforce.
'Alarm Bells Are Ringing'
Nevertheless, "the alarm bells are ringing, as bad news piles up at the economy's door," the New York Post writes. "Prices on everyday goods are rising sharply as inflation is stuck at 30-year highs. Supply chains snarled during the pandemic mean some store shevels are bare. A labor shortage in some industries has left jobs undone.
"And the ultra-contageous Delta variant has put a damper on the rush back to the office....Sentiment among consumers and workers has soured considerably as the year draws to a close."
Economists tell the New York Post that they are willing to stand by their prediction despite the "happy talk" coming out of the White House and government beaurocrats.
The government defines a recession as two consecutive quarters of negative gross domestic product (GDP) data. The U.S. Depatment of Commerce's National Bureau of Economic Research says that U.S. GDP grew 6.3% in the first quarter and 6.6% in the second quarter of 2021.
The bearish economists say their reading on consumer sentiment is based on two leading surveys that were also flashing red ahead of the housing recession of 2008 from The Conference Board and the University of Michigan. In 2008, they showed a decline in consumer sentiment of 19 points and 21 points, respectively, just before the Great Recession took hold.
Blanchflower calls these numbers an "early warning" system for trouble ahead, and he does not like what he sees in the figures now, i.e. a labor market stuggling to get back to work and inflation that "is threatening to spiral out of control."
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