The Federal Reserve may maintain interest rate stability, but according to Danielle DiMartino Booth, CEO of QI Research and former Federal Reserve advisor, an economic recession has arrived and is severely impacting private enterprises.

DiMartino Booth stated that unemployment, credit tightening, and collapsing consumer demand are already reshaping the economy. She believes that although mainstream media focuses on inflation and hopes for a "soft landing," economic fundamentals indicate that an economic recession is underway.

She said, "My view is that historically, when you start hearing sellers come forward and make these recession predictions, we are already in a recession. We see a continuous decline in employment throughout 2024. Unemployment started last year and has not stopped yet

Private companies lay off employees, confidence collapses

DiMartino Booth pointed out that there will be a sharp reversal in CEO sentiment and employment trends at the beginning of 2025. She said, "After the December election last year, we were initially optimistic, but the reversal that occurred in March was unprecedented

She cited layoff data from Challenger, Gray&Christmas, which showed that 172000 people were laid off in February alone, most of whom were private companies. She added, "Full time employment in private enterprises reached its peak in April 2022

She said that the real impact has now been reflected in ordinary people: "Americans have changed their lifestyle, reducing eating out and not going on holiday. These signs show that consumers are being forced into a new model."

She also pointed out that, according to the data of the University of Michigan, 66% of Americans expected the unemployment rate to rise in the next 12 months, which historically only occurred during economic recessions.

Credit tightening puts pressure on consumers

According to data from the New York Federal Reserve, as of March 25, 2025, American households are showing increasing signs of financial strain. Its latest consumer expectations survey shows that the mortgage refinancing rejection rate rose to 25.6% in the fourth quarter of 2024, the highest level since the survey began in 2013. The survey also showed a significant increase in rejection rates for applications for credit cards, car loans, and home mortgages. DiMartino Booth said, "People are over leveraged and lending institutions are shrinking, which is the beginning of the credit crisis

DiMartino Booth also mentioned the bankruptcy of Sherwood Foods in March 2025, which resulted in 1500 job losses and is evidence of the expanding economic pain. "When Americans began to reduce food consumption and basic expenditure, it was not cyclical, it was structural pressure," she said

The Federal Reserve is falling behind again

DiMartino Booth criticized Federal Reserve Chairman Powell's latest assessment that the risk of recession remains "low to moderate". She believes that the Federal Reserve relies on retrospective indicators and ignores increasing forward-looking risks such as credit tightening, profit margin compression, and layoffs.

She said, "There is a huge difference between the price paid and the price received, which is a manifestation of shrinking profits, not inflation

According to the Cleveland Fed's March 2025 Corporate Inflation Expectations Survey, CEOs' price expectations for the next 12 months have dropped to 3.2%, the lowest level since 2021. FactSet's data shows that the number of mentions of "inflation" during earnings conference calls has dropped below the level of 2019.

She said, "Companies can no longer pass on rising costs. This is anti inflation, not inflation, and the Federal Reserve has misread the signal

She also pointed out that the Federal Reserve's annual financial statement showed an operating loss of $77.6 billion in 2024, mainly due to increased interest expenses on reserves and reverse repurchases by banks.

She said, "This policy of paying interest on excess reserves can be traced back to the financial crisis, and now it's time to reconsider whether it's appropriate to do so

Gold is sending a message

DiMartino Booth believes that the gold price breaking $3000 per ounce in March 2025 is not only a response to geopolitical risks, but also reflects the market's growing skepticism towards the credibility of fiat currencies and central banks. Gold is the ultimate hedging tool. As uncertainty increases, whether from tariffs, policy mistakes, or debt, the reasons for increasing holdings of gold will only strengthen

According to data from the World Gold Council (WGC), central banks around the world reached record levels of gold purchases in the first quarter of 2025, while retail demand in Asia surged amid concerns about currency depreciation. DiMartino Booth pointed out that this coordinated flow towards gold reflects a reconfiguration of global sovereign risk.

She said, "When the central bank and private investors reach an agreement that gold is safer than paper currency, you'd better pay attention

She added that the significant increase in capital flowing into precious metal miners and ETFs in March indicates strong institutional involvement in the rise of gold prices.