The Keystone Speculator's Labor Market Indicator; UNITED STATES IS IN A LABOR RECESSION FOR 28 MONTHS AND COUNTING

THE UNITED STATES LABOR RECESSION STARTED ON 9/8/23 AND IS 28 MONTHS ALONG AND COUNTING; 2 YEARS AND 4 MONTHS!!

The country also remains in a housing recession and manufacturing recession in addition to the labor recession but an overall US recession continues vacationing with Godot (it is nowhere in sight). The Godot Recession (the recession that never arrives) occurs because consumer spending by the wealthy Americans, that benefited from the 15 years of Fed money-printing, remains robust and the AI hype and excitement, the chip orgy, also delays the overall US recession.

How can this be? For many decades, if America is in a labor, housing and manufacturing recessions, it is guaranteed to be in an overall US economic recession. Not now. Semiconductors are the new sheriff in town and that sector has gone great guns higher. Further, the AI hype sends stocks to the moon. The easy money provided by the Fed and Congress during the COVID-19 pandemic creates inflation and jobs galore. People could not spend the free money fast enough, like pigs feeding at the trough. Employers begged for workers during 2022-2024 but not so much anymore.

Company layoffs were high in October as managers try to clean house before the holidays. Smart businesses know not to lay people off during the holidays so if you keep your job through Halloween, you are likely safe until the new year. Well, 2026 is in full swing now and company managers are meeting in conference rooms deciding whose head should be lopped off next. Keep your head down to avoid the corporate scythe.

The obedient mice remain in their closet-sized cubicles pretending to work even if they are not that busy in case the boss walks by. No need for them to have an excuse to lay you off. Then the dreaded desk phone rings. Even the coworkers in the other cubicles know what that telephone ring means. The boss wants you to come to the his/her office so it is time to walk the Green Mile to the unemployment line. Heads pop up above the cubicle walls watching their friend walk, with head held low, to the gallows. They know his fate. Another One Bites the Dust. And another one's gone, and another one's done, another one bites the dust.

The Federal Reserve meets today and tomorrow with the rate decision and Chairman Powell press conference on tap tomorrow afternoon. The Fed is expected to leave rates on hold. That will create another hissy fit from King Donnie.

The Fed's mandate is price stability (rates) and maintaining maximum employment. Powell has been leaning the message towards concerns for the labor market so rate cuts win the day but the messaging will likely now transition back to an equal concern for both mandates.

The rise in precious metals (gold, platinum, silver, etc...) due to Donnie's daily theatrics and economic uncertainties, and rise in base metals (silver, copper, zinc, nickel, etc...) due to the AI and data center build-out, and steady increases in consumer prices at Walmart and the local grocery store as tariffs are sloughed-off on the American consumer, inflation may buoy higher faster than anyone thinks currently. It would be a good choice to stand back and pause on rate cuts even if it means everyone has to listen to King Donnie throw another temper tantrum for a few days because he wants perpetual low rates (he is a real estate guy that worships debt).

The unemployment rate popped to 4.3% in August 2024, almost a year and a half ago, and the thinking was that it would take a big jump higher as typically occurs once a recession takes root. Alas, instead, the blue line shows the rate bumping along sideways after that using the 4.3% as a resistance ceiling.

Not anymore. Resistance becomes support and the unemployment rate pops to 4.5% with the December data. The data collection and releases are messed-up due to the government shutdown in the Fall. Again, the thinking is that the overall recession is finally here (the US has been in a labor, manufacturing and housing recession for over 2 years running) but alas, it is staved-off by the AI orgy party, Fed easy money, and ongoing consumer spending by the wealthy class.

The January data a couple weeks ago was a 4.4% unemployment rate so a slight retreat. The rate is back-testing that critical 4.3% line in the sand.

Looking at Keystone's metrics, for the next US Monthly Jobs Report on 2/6/26, if the unemployment rate falls to 4.3%, remains at 4.4%, or comes in hotter at 4.5% and higher, all these outcomes continue the ongoing labor recession. The unemployment rate needs to drop to 4.2% and lower to signal the first step into producing a labor recovery.

The stage is set. The jobs circus is back in town next week. If you listen real close, you can hear the calliope music. The crony capitalism system has become a caricature of itself.