The Keystone Speculator's Unemployment Rate Indicator -- US LABOR RECESSION STARTED 9/8/23 NOW 19 MONTHS ALONG AND COUNTING

THE UNITED STATES LABOR RECESSION STARTED ON 9/8/23 AND IS 19 MONTHS ALONG AND COUNTING; OVER 1-1/2 YEARS!!

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 also delayed the overall US recession. This link takes you to the prior labor recession article.

How can this be? For many decades, if America is in a labor, housing and manufacturing recessions, than it is guaranteed to be in an overall US economic recession. Not anymore, buckaroo. 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 cannot spend the free money fast enough, like pigs feeding at the trough next to the barn out back. Employers begged for workers during 2022-2024 but not so much anymore.

Companies and businesses now admit that they know who they plan on sh*t-canning (layoffs) but are holding off a bit longer to see how the Donnie Trump Trade and Tariff War unfolds, or unravels. There are tens of thousands of stupid employees right now across America that do not know their job hangs in the balance and depends on King Donnie.

Trump buckled and backpedaled on his tariff threats to prevent the stock market from falling further and more importantly, foreigners were losing confidence in the all-mighty US dollar and treasuries. The orange head proclaimed a 90-day period for tariff talks, that consist mainly of Donnie talking to himself, that places a deadline drop-dead date at 7/8/25 (another 76 days or 11 weeks). If you do not have much to do at work, and are charging hours to overhead on your timesheet, you are toast and better start praying that the economy improves pronto, otherwise, your arse is grass. You will be first to be called into the office on a Monday morning and told to pack your stuff up and get the Hell out.

The stage is set for the Friday, 5/2/25, US Monthly Jobs Report. Federal Reserve presidents and members are already wiping beads of sweats from their greasy foreheads. The unemployment rate is for all the marbles.

In the last Fed meeting, Chairman Powell could not have been clearer if you focused on his words. The Fed will not act to lower interest rates unless the US unemployment rate moves above 4.4%. Keystone says the quiet part out loud. Powell's focus on the unemployment rate is obvious and yet journalists did not zero-in on this fact. The Federal Reserve is more concerned about the unemployment rate jumping higher, and are likely concerned about when rather than if it will occur. They are less concerned about inflation that is hyped in the daily news. The services inflation is soggy again, 3 out of the last 4 months. Of course the unknown wild card is King Donnie Trump and his tariff drama that may create a COVID-19 pandemic inflation redux.

The Fed is likely less concerned about inflation on the margins and more concerned about growth and jobs thinking that the 4.4% and higher rate is the trigger-point. With all this in mind, perhaps we can make projections on what may occur on 5/2/25.

The current unemployment rate is 4.2%. It hit 4.3% that matched highs not seen since December 2021. The rate has come down twice to back kiss the red line only to shoot higher again adding credibility to the scenario where the unemployment rate should continue higher. A move to or above 4.3% would be important since it is taking out those highs from 2021.

If the unemployment rate pops to 4.4% or higher, a big jump from the current 4.2%, bells, horns and whistles begin sounding at the Eccles Building. The Fed will be open to rate cuts going forward to help the economy so King Donnie will be happy for the bad news. The Fed does not want to see 4.4% or higher because consumers will worry bigtime about their jobs, the economy, and their future, and immediately put a halt to spending bringing on a US recession. The economy is not the stock market, however. The bad news of a 4.4% unemployment rate means rate cuts and more easy money to goose the US stock market higher and make the rich richer. Stocks will probably rally nicely going forward on news that the Fed's printing presses will begin providing easy money again. Isn't the crony capitalism system a sick piece of filth? Capitalism does not exist.

If the unemployment rate rises to 4.3% from the current 4.2%, the worry and angst would be similar to the previous paragraph but slightly less so. Rate cuts will be more likely going forward but everyone will want to see more data that means the 6/6/25 Jobs Report becomes key. The stock market will likely remain choppy flat with an upside buoyancy.

If the unemployment rate remains flat at 4.2%, status quo, it would give everyone a reason to think status quo, and go back to focusing on King Donnie and his latest trade and tariff antics. Stocks will move according to the Whitehouse soundbites.

If the unemployment rate drops to 4.1% from the current 4.2%, that means the economy is hanging in there better than thought. The funny thing is that everybody and his bro are buying everything off the shelves for fear that the tariffs will raise prices. Inventory stockers, clerks, and other employees are needed to push the products out the door right now and for another couple weeks, but then what when the shelves are empty and everyone's pantry is stocked with canned goods, water and toilet paper? Those workers will not be needed. The case for lowering rates will take on less importance but King Donnie will probably throw another hissy fit about rates. Stocks will likely be soggy since the rate cuts are not coming soon.

If the unemployment rate drops to 4.0%, the labor recession will end. Of course, another month or two of data would be needed to confirm, but 5/2/25 would mark the beginning of a US labor recovery.

Choose your poison. She was Poison in the Well, and I drank it. Technically, the rate breaks out higher and performed two back tests already hinting that she wants to run higher (4.3%, 4.4% and higher). 

With the US Monthly Jobs Report only four trading days away, the consensus is for 130K jobs and a steady unemployment rate of 4.2%. The prior month was 228K jobs and a 4.2% rate.

Watch the unemployment rate; it is what matters to the Fed and should be what matters to you. The stage is set. The jobs circus is back in town this week. If you listen real close, you can hear the calliope music. The crony capitalism system has become a caricature of itself.

Note Added 5/7/25, at 9:06 AM EST: The 4.2% unemployment rate scenario played out on Friday, 5/2/25, with a jobs number beat at 177K. Everyone and his bro were throwing confetti celebrating the 177K jobs. Why? That headline number is unreliable. The rate matters since Chairman Powell is following the rate. Stocks rallied on the release but surprisingly, the 2-year yield jumped about a dozen basis points. The behavior reflects the optimism on the 177K jobs number, go figure, so stocks are bot and notes and bonds are sold off, some of that money flowing into equities. The group think dictates the market action but people should be concerned that the unemployment rate is 4.2%, sticky, and likely going to continue higher (recession on the come). The same set-up is at play for the 6/6/25 jobs report. A 4.0% rate and lower (unlikely) will signal the all-clear and end of the labor recession. A rate of 4.1% or 4.2% signal ongoing labor angst. A rate popping to 4.3% and higher means the wheels are falling off the economy and the Fed will be more open to talking about rate cuts (sending stocks higher on easy money) instead of worrying about inflation brought on by the self-inflicted Trump Trade and Tariff War baby games.