After over a decade of obscene Federal Reserve money printing and then Congressional fiscal stimulus during the pandemic, we are in uncharted waters. The US remains in a housing recession over the last year. Ditto the manufacturing recession. The chart above shows that the US labor recession is 8 months along and worsening again. This triumphant of gloom guarantees a recession; until now. It is truly different this time.
Japan and UK had stated that their economies were in recession. The Richmond Fed Mfg Survey called out a one-year recession. The JOLTS job openings report lists a soggy quits rate in recent months disappointing Fed Chairman Powell (a quits rate moving higher indicates that people are comfortable moving on from their jobs either to a new job or to start a business but a lower quits rate indicates that people are hunkering down at work worried about losing their current jobs not liking the prospects of finding a new job nor starting a biz). The quits rate is a favorite statistic of Treasury Secretary Yellen, that previously held Powell's job, and now the number is a Jay fave.
It is mind-boggling that housing, manufacturing and labor are in recession but the overall economy is not. Huh? Whazzat? It does not make sense but the truth is always in the numbers. The housing market is not normal since first-time buyers are muscled-out of the way by hedge funds, foreign interests and even cartels buying up every available home raising prices. What a sick America the Fed and both corrupt political parties have created.
The chart above is self-explanatory. The blue line is the US unemployment rate and the red line is a proprietary Keystone indicator. The economy and employment is fantastic when the blue rate line is below the red line. Blue above red signals trouble ahead. The redheads are always feisty and hard to handle.
The labor recession started 9/8/23 and note that from December through February 2024 it looked like the recession would end as soon as it started (blue line heading lower ready to cross back under the red line). But boiinnnggg, the blue line is now rising again and diverging up and away from the red line indication that labor conditions are worsening and the 8-month labor recession continues.
For months, traders, investors and analysts cheered the happy jobs numbers proclaiming that the economy is growing and that is the path forward with a soft landing on tap. After the Friday Jobs Report, traders are cheering the weaker than expected 175K jobs number since that means the Fed will lower rates faster. People are trained well under the cruddy crony capitalism system. They are front-running the goosing that the Fed will do. Sick stuff. The funny part is that the SPX has ran higher from about 4K to 5.2K expecting six rate cuts and traders now treat this huge move higher as if it did not happen. Like Pavlov's dog trained with a bell, modern-day traders are cheering for and happy to see weak data since that means the Fed will print more money and stocks will go higher to further enrich the wealthy class. It is the moral hazard many of us talked about over a decade ago. Crony capitalism is on its last legs.
People do not think an overall economic recession is possible since the Fed will always ride in on the pale green horse to save the day and protect the wealthy. People reporting business news and the analysts, traders and investors involved in the markets and economy daily are all millionaires or near-millionaires. The media does not provide the perspective and viewpoint of the common American. Crony capitalism created the land of the have's and have not's. Once you understand that capitalism does not exist, everything will make a lot more sense to you. La-la-la. Vault of Heaven.
Even though housing, manufacturing and labor are circling the drain, the overall economy holds up; like a drunk leaning on a lamppost but still standing nonetheless. One of the reasons things are different this time are chips. Most every product made nowadays has a computer chip. Semiconductors and technology are a new game in town that help create buoyancy in the markets and economy despite gloom elsewhere. Remember, before 1980, there was no computer technology in use, and weakness in the housing and auto industries would forecast an overall recession guaranteed. Not anymore.
In the job stats, there are lots of part-time jobs. People are working two jobs to make ends meet due to Biden's war on the US energy complex (oil and gas) that has created the heavy inflation burden placed on the backs of common folks. Rich folks do not care about inflation because their rich. Biden's open southern border problem allowing a mass migration also manipulates the jobs data. A lot of the new jobs over the last few months are the lesser-skilled jobs. Rich folks want to travel again after the pandemic so leisure and hospitality jobs increase. Workers are needed to carry bags, drive taxis and Ubers, cook meals and clean rooms for the wealthy class.
Education and health jobs increase. These are migrants or Americans working a second job cleaning bedpans and vomit off sheets at nursing homes. Hold your hand out for the American dream. Here's a bedpan that needs cleaned and don't forget to change the soiled sheets in Room 222. Retail jobs increase. This is an American needing a second job standing in the men's suit department helping customers pick socks or smelling feet as they help a wealthy dude pick out a new pair of Prada's.
Leisure and hospitality jobs increase. Migrants need to cook meals, carry bags, turn sheets, put out new towels and clean those dirty toilets. Welcome to your American dream; now get to work. Manufacturing jobs have been in decline or trying to hold steady but do show a minor increase on Friday along with construction jobs. This is migrants and others handed a broom and told to sweep the warehouse floor, or keep the construction yard free of debris, and don't forget to clean the toilets.
Most common Americans laugh nowadays when they hear the words, 'American dream', and someone typically counters with, 'yes, the American joke'. The only people still spouting the American dream blather are the uneducated and ill-informed foreign migrants or the US elite class and their upper middle class sycophants sitting on bags of money since they control the crony game and all own stocks that the Federal Reserve goosed higher over the last 15 years. The wealthy elite controlling America's rigged crony capitalism system keeps the masses at bay by making it sound like everyone has a chance. The rich played that card for the last five decades but the public now understands the game.
Thus, mathematicians say thus a lot, the US labor recession continues and is a harbinger of bad times ahead. What is likely is that Pope Powell has waited too long to cut rates so the bottom will probably fall out of the market and economy. Consumer spending will lessen sending many things down the rabbit hole and this slows when people worry about losing their jobs. Stocks and real estate will drop. Commercial real estate is already in trouble. As the bottom falls out, the banks will be in immediate trouble due to bad loans defaulting. The US is overbanked by 3K or 5K banks so some day these need to go away.
As credit conditions deteriorate quickly, banks will limit credit and this is already occurring. It is comical that the only people that can get a loan during a recession are people that do not need a loan (young people take notice since you have not seen a recession in your lives except for the goofy pandemic period where the US government saved the day misguiding-ly handing everyone and his bro mountains of printed money; if you have equity in a home, get a home equity line of credit immediately; do not use it but have it there in case you or your partner, or both of you, lose your jobs over the coming weeks and months; if you do not have equity in a home, you better put on your beggin' pads, kneel, and start kissing the boss's *ss). Common folks are drowning in debt and it all falls apart when the recession hits. The Fed will then cut rates quickly like madmen leading to the dis-inverting of the yield curve (2-10 spread) which then locks in the overall US recession going forward.
For next month's Jobs Report on 6/7/24, an unemployment rate of 3.7%, 3.8% or the current 3.9%, or higher, all signal that the labor recession continues. The game would change and the labor recession would end if a 3.6% unemployment rate or lower is reported on 6/7/24 (unlikely).
It will be interesting to see if communist China's economy can get back on track but it is not looking good since they have a property bubble bursting that is like the US 2008-2009 bubble.
Analysts have not only written-off a US recession but they do not even consider that the entire world may be on the precipice of a major global recession/depression. I Can't Believe We're Here. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.
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