The US economy is showing troubling signs that point to a hard landing—an economic downturn marked by a sharp decline. From mass layoffs to distressed real estate, these indicators reveal a storm brewing beneath the surface.
Visa Cuts Over 1,400 Jobs
Visa plans to lay off approximately 1,400 employees, focusing on technology positions. Roughly 1,000 tech jobs are set to be eliminated as Visa aims to streamline its global operations, sending a clear signal of economic belt-tightening.
California Job Openings Plunge 30%
Job openings in California, which has one of the nation’s highest unemployment rates, have plummeted by nearly 30% over the past year. With one of the worst employment landscapes in the country, California is feeling the squeeze more than most, hinting at a wider economic contraction.
Trucking Employment Peaks Before Recessions
Historically, trucking employment trends peak before a recession, as demand for goods transport weakens. A downturn in this sector is a classic signal of a slowing economy, and the industry’s current trajectory suggests that a recession may not be far off.
UMich Sentiment Falls to 64.9
The University of Michigan’s Consumer Sentiment Index sits at a worrisome 64.9, a level historically associated with recession conditions. When consumer confidence dips this low, it reflects widespread concern over economic stability.
Yield Curve’s Shifting Signals
A shift in the yield curve from inverted (where short-term rates exceed long-term) to positive often forecasts economic downturns rather than stability. Currently, the 30-year yield is rising relative to the 3-month yield, a shift that has frequently signaled a hard landing in the past.
Tech Earnings Slow Down
Big Tech’s earnings, once the powerhouse of growth, are moderating. Industry analysts at Barclays confirm that tech earnings growth is cooling, which suggests that even the giants are feeling the pressure in a slowing economy.
"If you think about Big Tech, which is a collection of six stocks, that's been the fulcrum for this market and holding it not just from earnings, from [a] returns perspective as well," Barclays' Venu Krishna says. "Their earnings as a group is moderating." pic.twitter.com/E5ToysWl74
— Yahoo Finance (@YahooFinance) October 29, 2024
Banks Face $750 Billion in Real Estate Losses
US banks are sitting on $750 billion in real estate losses—an eye-watering figure that exceeds losses during the 2008 financial crisis. The banking sector’s exposure to real estate losses weakens its stability and signals deeper issues within the commercial property market.
Commercial Real Estate Crash Hurts Even Top Bonds
Top-rated commercial mortgage-backed securities (CMBS) are facing losses, an unusual event last seen during the financial crisis. As property values fall and loan defaults rise, even investors in the safest bonds are feeling the shock, intensifying concerns over an impending market collapse.
Together, these eight signals point to a hard economic landing. While the exact timing remains uncertain, the warning signs are unmistakable, echoing a crisis that may be as impactful as 2008.
Sources:
- Visa layoffs
- California job openings
- Trucking employment
- UMich Consumer Sentiment Index
- Yield curve inversion
- Big Tech earnings
- U.S. Banks real estate losses
- Commercial Real Estate Crash