If you’ve been watching the headlines, you’ve probably seen the growing debate about whether a recession is coming. But what if we’re already in one?
A recent article from MSN, based on insights from Mark Zandi, suggests that a lesser-known economic indicator may already be signaling that the U.S. economy has entered a recession.
What Is the Indicator?
The tool referenced is called the “Vicious Cycle Index” or VCI. It builds on a well-known concept called the Sahm Rule, which tracks how quickly unemployment is rising.
In simple terms, this indicator looks beyond the headline unemployment rate and focuses on how the labor market is actually behaving beneath the surface. It adjusts for changes in labor force participation, which can sometimes mask underlying weakness.
According to Zandi, this indicator has:
- Correctly identified every recession since World War II
- Recently crossed a threshold that historically signals a downturn
- Remained elevated for several months
His conclusion? There is a strong possibility the U.S. economy is already in a recession, even if it hasn’t been officially declared.
Why the Data Feels Confusing
If that sounds surprising, you’re not alone.
Recent job reports have shown positive numbers, including a solid increase in payrolls. But Zandi and others argue those numbers may not tell the full story.
Some of the concerns include:
- A decline in labor force participation, meaning fewer people are actively working or looking for work
- Temporary factors, like weather and labor strikes, skewing job data
- Continued pressure from global events and economic uncertainty
Even Jerome Powell has acknowledged that the economy has faced significant challenges, though he has remained more optimistic overall.
So… Are We in a Recession?
The honest answer is that no single indicator can say with certainty.
The official call typically comes from the National Bureau of Economic Research, and that determination often happens months after the fact.
Even Zandi admits the VCI could be wrong, especially given how unusual the current economic environment has been. We’ve already seen instances where traditional indicators signaled trouble that never fully materialized.
What we do know is this:
- Recession risks are elevated
- Economic signals are mixed
- Planning matters more than predictions
What This Means for You in Fresno and Clovis
For families and business owners here in Fresno and Clovis, the question is less about labeling the economy and more about how prepared you are for uncertainty.
Market cycles come and go. The real focus should be:
- Are your investments aligned with your timeline?
- Do you have a plan for income if conditions shift?
- Are you positioned to weather volatility without making emotional decisions?
This is where a thoughtful financial plan makes all the difference.
Do You Agree or Disagree?
Some economists believe the warning signs are clear. Others think the economy is more resilient than it appears.
Where do you stand?
Do you think we’re already in a recession, or do you believe the economy is still holding steady?
If you’re wondering how economic uncertainty could impact your financial plan, our team at Legacy Finance in Fresno and Clovis is here to help you think through your next steps with clarity and confidence.
Source
This article is based on reporting from MSN and commentary from Mark Zandi.