(Kitco News) - The U.S. could be in the heat of a recession right now, according to Danielle DiMartino Booth, CEO and Chief Strategist for QI Research.
A recent jump in bankruptcies in the U.S. resembles a similar pattern seen during the global financial crisis, DiMartino Booth told Kitco News' anchor Jeremy Szafron on the sidelines of the New Orleans Investment Conference.
"We've seen 19 bankruptcies of companies with $50 million or more in liabilities. The post-pandemic high was 23. The current run rate takes us back to the great financial crisis," DiMartino Booth noted. "And we're seeing small bankruptcies as well. It's filtering through into personal bankruptcies as U.S. households just have too much credit card, auto, personal loans, to say nothing of the mortgages."
The U.S. is "in a recession" and the downturn likely began in April 2024, DiMartino Booth explained, pointing to negative revisions in private sector job numbers as a key indicator. She added that "we actually lost 28,000 jobs in the private sector" in October. These downward revisions have become "systematic in nature" and have been ongoing since January 2022.
Federal Reserve outlook: more cuts are coming
After 75 basis points of rate cuts since September, the Federal Reserve will continue to lower interest rates in response to the recession, DiMartino Booth pointed out. The "statisticians at the Federal Reserve are losing their mind" due to the recent data revisions, which require them to recalculate their models and will likely push them towards further rate cuts, she added.
DiMartino Booth noted that during the Trump administration, more "negative data" would be released, further revealing the extent of the recession.
"We know that most government statisticians are very left-leaning in nature, which might have been one of the reasons why we haven't seen the bad data come out. But going forward, they're going to be much more amenable to letting the negative data taint the Trump administration," she stated. "We're going to realize that we are in recession. That gets us to the next question - when we're going to come out of it."
Watch the video above for Dimartino Booth's recession timeline and the date when the U.S. will emerge on the other side.
In light of this, DiMartino Booth advised adopting a defensive posture in the current economic climate. She suggests investing in "companies that are going to continue to pay their dividend, no matter what happens in the rest of the world" and "collecting money on T-bills." She also remains bullish on gold, believing it to be "a logical place to have your diversification and defensive positions."
For more on her investment strategy, watch the video above.
DiMartino Booth also listed the top three biggest risks for next year. Watch the video above for insights.
This video is brought to you by: Uranium Energy Corp and U.S. GoldMining Inc.
