Danielle DiMartino Booth: We're In A Recession That Won't Be Acknowledged for Years
Summary
- The "Silent" Recession: The US is currently in a recession that may not be officially acknowledged for years. The labor market is significantly weaker than headline numbers suggest, with 419,000 net job losses since mid-2024 when adjusting for anomalies in Education and Health Services.
- Inflation is Dead: "Trueflation" (blockchain-based real-time data) is tracking at roughly 0.7%, significantly below the Fed's target and CPI prints. The Fed is viewed as "tone-deaf" for maintaining tight policy in this environment.
- Consumer Distress: There is a bifurcation in the economy. While some spend recklessly, a large portion of Americans are using "Buy Now, Pay Later" (BNPL) services for necessities like medical bills and utilities. Delinquencies in mortgages, auto loans, and credit cards are at or near record levels.
- Manufacturing Anomaly: Despite the broader downturn, there is a specific "restocking cycle" occurring in the manufacturing sector, which is generating net positive job growth.
Trade Ideas
"Office delinquencies just hit the highest level on record and distressed office sales are clearly putting some regional banks under pressure in their loan books." Record office vacancies and delinquencies directly impair the balance sheets of regional banks (who hold the loans) and commercial real estate services firms (like CBRE, which she notes "crashed" on news of AI reducing need for junior staff/office space). As distress cycles through the system, equity values in this sector face further compression. Short Regional Banks and Commercial Real Estate Services. A massive Fed pivot or government bailout of the CRE sector.
Danielle DiMartino Booth
CEO of QI Research
"Trueflation... it's at I think 0.7%ish right now... We're in a recession that won't be acknowledged for years." The Federal Reserve is currently keeping rates high based on lagging data, while real-time inflation is near zero and the labor market is deteriorating. Eventually, the Fed will be forced to aggressively cut rates to align with the economic reality of 0.7% inflation and a recession, which will drive bond yields down and prices up. Long duration US Treasuries to capture capital appreciation from inevitable rate cuts. The Fed remains "higher for longer" despite the data, causing short-term pain for bondholders.
Danielle DiMartino Booth
CEO of QI Research
"There were 5,000 jobs created in manufacturing. We can talk about the good news there if you want because there actually is a restocking cycle going on." While the broader service/consumer economy is weakening, the manufacturing sector is entering a specific inventory restocking phase. This divergence creates a pocket of strength in industrial stocks even amidst a general recession. Long Industrials/Manufacturing to play the restocking cycle. The broader recession eventually drags down manufacturing demand, ending the restocking cycle prematurely.
Danielle DiMartino Booth
CEO of QI Research
"The fastest area of adoption for buy now pay later... is medical and dental bills... Delinquencies for... credit card and auto loans remained above pre-pandemic levels." Consumers are using high-interest or installment debt (BNPL) to pay for basic survival needs (utilities, medical), not just discretionary items. With delinquencies already rising to record levels, lenders exposed to subprime or unsecured consumer credit face a wave of defaults. Short Consumer Lenders and BNPL providers. Wage growth accelerates or government stimulus provides a lifeline to the consumer.
Up Next
This Julia LaRoche Show video, published February 19, 2026, features Danielle DiMartino Booth discussing KRE, CBRE, TLT, ZROZ, XLI, VIS, AFRM, COF, SYF. 4 trade ideas extracted by AI with direction and confidence scoring.
Speakers: Danielle DiMartino Booth · Tickers: KRE, CBRE, TLT, ZROZ, XLI, VIS, AFRM, COF, SYF