According to a British giant report, the US is probably in a state of stagnation, which could be extended for one year or more.
The United States economy probably entered a “state of stagnation”with a risk of recession in the next two years that increased to 50%as explained by analysts from a multinational bank Barclays.
In a research note, the bank revealed that the “inflection points”, which incorporate recent payroll reviews, suggest that “The underlying rhythm of US growth accelerated to a level that makes it vulnerable to a recession.”
Barclays also added: “Several specifications suggest that the US is probably in a state of stagnation, and perhaps for a year or more. With this greater susceptibility, the model places the probabilities of a recession within eight quarters in approximately 50%“
The analysis is based on a regime change model that evaluates the probability that the economy is in one of four states: Quick expansion, expansion, stagnation speed or recession.
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Stagnation: Why Barclays ensures that the US economy suffers from it
Barclays pointed out that the state of stagnation is defined as the one in which The economy is “susceptible to recession, but it is not an inevitable conclusion.” Two key indicators were used: the relationship between non -agricultural employment and the workforce, and the unemployment rate, often referred to through the Sahm rule.
Barclays indicated that Both measures “imply a high probability that the economy is in a state of stagnation”with probabilities that range between 47% and 90% when considering the first estimates of the next reference reviews of the payroll survey.
Barclays said the results support the expectations of federal reserve fees for this year.
“Our results offer some support for the expectations that the Fomc will pivot towards rates cuts in September,” the bank wrote, adding that he expects cuts from 25 basic points both in September and December.
Source: Ambito
