Why My Recession Rule Could Go Wrong This Time

Even so, the unemployment rate has risen, threatening to trigger a negative feedback loop of further unemployment that leads to a recession. When workers lose paychecks, they cut back on spending, and as businesses lose customers, they need fewer workers, and so on. Currently, the signals are mixed: the hiring rate has fallen below pre-pandemic levels, while the firing rate remains low. And growth in consumer spending, even after accounting for inflation, has been strong this year.

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