The United States (US) currently faces a 40% risk of falling into a recession, according to the latest indicators, amid significant challenges posed by the dedollarization efforts of the BRICS alliance. This assessment takes into account a stock market decline amounting to USD 2 trillion.
Concerns about a US recession are undeniable, especially given the impetus from BRICS’ dedollarization initiatives. The US economy has consistently remained fragile, with the Federal Reserve maintaining interest rates at their highest levels in 23 years. As BRICS leads a financial revolution, the likelihood of a US recession grows.
This recession risk is measured using a new indicator developed by economists Pascal Michaillat and Emmanuel Saez, which is based on the Sahm Rule created by economist Claudia Sahm. This indicator utilizes the three-month moving average of the unemployment rate and the lowest unemployment rate over the past 12 months to distinguish recession conditions. If the difference between these two figures is at least 0.5, the country is considered to be in a recession. Michaillat and Saez measure using both unemployment and job vacancy rates through a dual-sided indicator. If their indicator shows a difference of 0.3 points, a recession may have already begun. If the indicator reaches 0.8 points, there is no debate about its existence. For the observations in July, the indicator already stands at 0.5 points.
This new indicator is accurate for measuring the US recession of the 1930s. In contrast, the Sahm Rule is only applicable up to the 1960s. This calculation provides a new perspective on US economic concerns, particularly if conditions do not improve. According to WatcherGuru, if the US central bank does not lower interest rates until September as anticipated, the situation could deteriorate further.
- The US faces a 40% recession risk amid BRICS dedollarization efforts and a $2 trillion stock market decline.
- A new indicator by Michaillat and Saez signals recession signs with a current reading at 0.5 points.
- Economic fragility persists with high interest rates; deterioration is possible if rates remain unchanged until September.
US Recession Risk
Recession Indicator
Economic Fragility
