US Recession Indicators: Danielle DiMartino Booth on America’s Economy

21st November, 2025

When most mainstream economists discuss the state of the U.S. economy, they default to tidy explanations like; the consumer is strong, the labor market is resilient, GDP is stable, soft landing ahead. But every now and then, someone who actually understands the underlying data steps forward and explains what’s really happening beneath the headlines.

Danielle DiMartino Booth has made a career out of exactly that kind of analysis. She is one of the few voices who can translate the granular, ground-level information e.g., hiring trends, warning notices, consumer credit data, business behaviors etc., into a coherent macro story rather than an ideological one.

Her latest presentation is among her clearest and most urgent yet. Not dramatic, not apocalyptic, just relentlessly factual. And those facts point to a single conclusion; the recession is not a future event; it is a present reality concealed only by the natural lag of government reporting and the willful blindness of an establishment desperate to believe its own narrative.

Below is a deeper breakdown of Danielle’s key insights. I also highlight where my own inflation outlook diverges from hers, but the core message is the same – the U.S. economy is deteriorating in ways the public has not yet fully recognized.

The Labor Market Is Quietly Signaling Recession

Danielle opened with a sharp but accurate critique of Jerome Powell’s claim that the Federal Reserve is “driving in the fog” and cannot see the road ahead. The Fed may prefer that metaphor, but it does not match reality. The labor market data is not foggy; it is simply inconvenient.

Danielle points out that the most honest and least manipulated data sets i.e., those that capture actual employer behavior rather than modeled guesses, have already turned decisively negative. One of the most important is the ongoing revisions to payroll data.

Month after month, job-growth numbers that were initially presented as robust have been quietly revised downward, in some cases flipped into outright declines. June’s revision to negative territory was not a fluke but part of a pattern showing that jobs have been deteriorating since the second quarter of 2024.

This trend continued into the third quarter, briefly stabilized during the election-period distortions, and then returned to recessionary form in the first quarter of 2025. According to Danielle, roughly 60 percent of recent months have seen more job destruction than creation – something that almost never happens outside of recession.

She emphasized that employers themselves are the more accurate storytellers. Surveys from millions of businesses show hiring freezes spreading, job openings being pulled, and temporary workers being quietly let go, which is classic pre-recession behavior. One of the strongest indicators, WARN Notices (mandatory filings companies submit before large layoffs) has surged to its highest point since 2009. Companies do not file these notices unless they are preparing for meaningful staff reductions. It is, in essence, a corporate confession that the softening has begun.

Additional stress appears in small-business hiring intent, which has fallen off a cliff. Small firms employ nearly half the country. When they stop hiring, recessions deepen quickly. Danielle’s argument is simple; labor markets turn before the official recession declarations, and they have already turned.

A Frozen Housing Market Is Squeezing Households

No economy with a frozen housing market is healthy. Housing is not merely a sector; it is the circulatory system of American economic life. When homes are purchased, millions of ancillary industries benefit e.g., construction, materials, moving services, furniture, appliances, lending, brokerage, and so on. When homes do not move, none of that economic activity happens. And right now, housing turnover has collapsed to historic lows.

Danielle highlighted a disturbing trend: the number of young adults living with their parents has risen to levels unseen since the Great Depression. This is not the result of lifestyle preference or cultural change. It is an involuntary adaptation to economic constraints – wages that do not match costs, rents too high to clear, mortgages unaffordable even for those with good incomes, and major life milestones pushed indefinitely into the future.

A stagnant housing market gradually becomes a deadweight on the entire economy. It reduces mobility, stalls family formation, and freezes wealth-building among younger generations. Danielle emphasized that if you cannot get household formation, you cannot get sustainable consumption growth. Without consumption growth, the U.S. economic model breaks down.

Even worse, this freeze has a secondary effect in that homeowners who locked in ultra-low mortgage rates during earlier cycles are effectively trapped. They cannot afford to sell, because they cannot afford to buy at today’s rates. This “golden handcuff” dynamic shrinks inventory, which in turn forces prices up even as demand collapses. It’s an unhealthy, distorted market that benefits no one in the long term.

The housing market’s paralysis is not simply a symptom of recession; it’s a generator of recession. And according to Danielle’s analysis, that process is well underway.

The Consumer Is Cracking at the Top End

One of the most telling signs of trouble in any economy is when stress stops being confined to the usual vulnerable groups and begins to spread to those traditionally considered safe. Danielle presented data showing that credit deterioration is rising fastest among Americans earning over $150,000 per year, the segment of the population that most economists assume will continue spending through downturns.

This shift is profound. High-income households are typically resilient because they have savings buffers, multiple income sources, and access to credit at favorable terms. When they begin missing payments, restructuring debt, or selling assets, it means the strain is no longer a fringe issue, it is systemic.

Two developments, in particular, stood out in Danielle’s analysis:

Prime credit-card delinquencies have surged, erasing the gap between prime and subprime distress.
Auto repossessions are approaching 2009 levels, despite borrowers becoming increasingly sophisticated in hiding vehicles from recovery agents.

This erosion of financial stability among high earners is one of the clearest recession signals available. Households that used to absorb shocks for the economy are now amplifying them. And unlike in past cycles, there is no obvious relief valve, because interest rates remain high, asset prices are inflated, and wage growth is trending down.

When the top end begins to break, the recession moves from technical to tangible.

A Market Driven by Passive Flows Is Masking Deep Structural Decay

Danielle dedicated a portion of her presentation to uncovering an uncomfortable truth: U.S. equity markets are no longer functioning as price-discovery mechanisms. They are functioning as mechanical systems driven by passive investment flows. The largest companies, particularly the Magnificent Seven, are receiving automatic inflows of capital regardless of earnings, valuation, or business fundamentals.

The most striking example she cited is Apple, whose global market share has remained flat or slightly declined over the past decade while its stock price has soared.

This isn’t investor optimism, it’s structural distortion. As more people invest through index funds, more money is pushed into the biggest companies by design. This creates a feedback loop where size begets size, not performance. In such a system, market highs no longer reflect economic strength. They reflect inflows divorced from fundamentals.

Meanwhile, beneath these inflated equities, the real economy is fraying. Danielle pointed to a rise in corporate bankruptcies, especially among mid-sized firms that lack the financial cushion of tech giants. Commercial real estate is deteriorating rapidly, with office vacancy rates reaching levels once considered unthinkable. Office REITs are beginning to fail outright, echoing patterns from the 2008-2009 crisis but with far fewer policy tools available to cushion the fall.

She also underscored that AI, often hailed as a productivity revolution, is not yet producing meaningful efficiency gains. Instead, it is accelerating layoffs and reducing demand for white-collar labor – cost cutting, not value creation. Many companies over-hired during the post-pandemic boom and are now unwinding those staffing levels quietly and aggressively.

In short, the stock market’s apparent strength is an illusion created by passive flows, while the real economic landscape is deteriorating toward recession.

Conclusion: The Recession Is Not a Forecast, It’s a Diagnosis

Danielle DiMartino Booth’s presentation carried a clarity rarely found in mainstream economic commentary. Her argument is not that a recession might happen or that conditions could deteriorate. Her argument is that we are already in it, we are currently experiencing the early waves of contraction through labor-market softening, a frozen housing sector, stressed consumers, and a market structure hiding decay beneath passive inflows.

She does not rely on narratives or political spin. She relies on the data that businesses generate in real time. That data tells a story that is unmistakable i.e., the pillars of the U.S. economy are weakening simultaneously, and the buffers that once cushioned downturns have eroded.

Whether the next phase is deflationary contraction, as Danielle suggests, or inflationary stagflation, as I expect, the direction is the same. Downward. Into deeper stress. Into a recession that policymakers will eventually acknowledge but cannot prevent.

The signals are not flashing. They are blazing.

The question is no longer whether a recession will happen. It is how individuals and institutions will prepare for the version of it that is already here.

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