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  • Frank Tian

Recession is Coming?

Updated: Sep 18, 2022

We barely come out of the pandemic, now facing the risk of recession?

The search volume of the word “recession” has sharply shot up. 👇

The last time it was this high was 6 months before the pandemic.

Before that, it was the beginning of the Great Financial Crisis.

In the backdrop is the high inflation,

Pushed higher by supply chain bottleneck and the war.

People are rightfully worried that their income growth cannot keep up.

As a result, consumer confidence has dropped.

People will limit their spending, especially discretionary/large tickets.

Major retailers Walmart, Target, and Kohl’s reported weak earnings last week.

The central bank is walking on a tightrope.

Taming inflation means some bubbles have to be popped.

Too much collateral damage runs the risk of tanking the economy.

Here is a summary of the latest US macro numbers:

- Fed hiked the rate 75 bps so far.

- Q1 2022 GDP shrinks 1.4% over Q1 2021.

- April inflation Y/Y growth down slightly: still high at 8.3%.

- May consumer confidence (U of Michigan): tanked 6.1 points M/M to 59.1.

- The latest weekly unemployment insurance claims rose to 218,000.

- Number of quits reached a new high in March: 4.5 million.

- Number of job vacancies slightly up in March: 11.5 million.

- April added 428K jobs; unemployment rate 3.6% (3.5% in Feb 2020).

- April # of unemployed down slightly at 5.9 million (5.7 million in Feb 2020).


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