The U.S. Economy Is Flashing Recession

The U.S. may again be on the cusp of a recession. Stagnant payrolls in August added to recent data showing that manufacturing is slowing, consumer confidence is sliding, home values are falling, and bond prices are rising as investors shun stocks for the relative safety of fixed-income securities. “At this stage of the typical expansion we expect above-average growth and instead we are barely seeing any growth at all,” says James Hamilton, an economics professor at the University of California at San Diego who has advised Federal Reserve banks and studied what tips the U.S. into downturns. “We have to be worried.”

September could mark the start of the slump, says Julia Coronado, chief economist for North America at BNP Paribas in New York, who predicts the economy will shrink at a 2 percent annual rate in the fourth quarter. “When there are no jobs and no income, there will not be a lot of spending either,” she says.