The Keystone Speculator's Unemployment Rate Indicator; US LABOR RECESSION STARTED 9/8/23 AND IS NOW 1-YEAR OLD AND COUNTING

THE UNITED STATES LABOR RECESSION STARTED ON 9/8/23 AND IS 1-YEAR OLD AND COUNTING. The country also remains in a housing recession and manufacturing recession but an overall US recession continues vacationing with Godot. it is the Godot Recession. 

The US economy used to be dominated by the housing and auto sectors. When they go into recession, the whole country would drop into recession. 100 years ago, the railroads ruled the roost. Housing and autos/manufacturing are now second tier players in the recession prediction game. Semiconductors are the new sheriff in town and the chips are now the dominant influence on the stock market and economy. Think about it. Nearly every product you buy nowadays has a chip in it.

Despite the lousy labor, housing and manufacturing industries, the Godot Recession occurs (the recession never shows-up). This is because semi's now rule the roost and are the most important metric. The AI hype has only served to bolster this top-spot, king-of-the-hill position. In addition to the chips holding up the markets and economy, so are the wealthy class.

The top 20% of Americans, the have's, made filthy rich by the Federal Reserve's obscene money-printing, account for 50% of the consumer spending in the United States nowadays. The other 80% of have-not's account for the other half of spending and they are not buying another vacation home, or yacht, or rare diamond bracelet, or brand new Mercedes convertible. The have-not American peons are buying food, diapers, baby formula, and necessities; consumer staples. They wonder how they will pay rent or the mortgage with the car and home insurance rates going through the roof.

So 2024 is a tale of the have's and have-not's. Even the wealthy cannot spend limitless. They only need one $15,000 freezer, $2,000 wine rack and $40,000 cement driveway. After that it is time to kick back and enjoy life.

The unemployment rate drops on Friday from 4.3% to 4.2%. The prior month was 4.253% rounded up to 4.3% while the Friday number is 4.221% rounded down to 4.2% creating the 0.1% differential but in reality the numbers are only 0.03%, 3 bips, apart. The US unemployment rate has been 4.25% for the last 2 months. The low prints were a 3.4% rate in February 2023 and May 2023. The US unemployment rate is now 0.8% above those lows and was 0.9% above last month; not good.

The blue line is diverging up and away from the red line which means trouble ahead and it is time to watch your wallet. Over the coming weeks and months, some of you will be called into the boss's office that will tell you to clear your desk drawers, pack up your family pictures, house plant that needs watered, and change for the coffee machine, and get the Hell out. Oh yeah, hand in your badge and door card since you are no longer allowed in the building. Beat it.

Young adults under 40 years old will learn a lot about yourselves and the people around you as the country slides into recession this year. You lived through the pandemic recession but that was an oddball animal in its own right. In an economic recession, you or your significant other will likely lose your job, maybe both of you, so obviously you should already be planning for such an outcome. Also understand, that if you think it is easy to get another job now and you are not worried, you are living a false reality. In a recession, hundreds of other folks will now want the same available job and the guy that told you to call him anytime you wanted to work for him now does not even take your phone calls.

For the next Jobs Report on 10/4/24, the unemployment rate can be 3.9%, 4.0%, 4.1%, 4.2% and higher, for the US labor recession to continue. The rate would need to drop to 3.8% or lower to nullify the labor recession indicator and instead point towards a steadier growth pattern ahead. With the rate at 4.2% now, remaining in an uptrend, it is hard to imagine that a 3.8% print will occur in 4 weeks; it is very unlikely. It would be a huge 0.4% pullback. It is easier to envision the rate remaining above 4% going forward and actually expand higher.

The tech and semiconductor stocks ran out of gas last week so that is one of the two linchpins faltering. The rich are still spending money but that should lessen going forward. The weak chips, and wealthy folks turning cheap with their spending, will join the somber labor, housing and manufacturing sectors, and all ride that recession Highway to Hell.