The Keystone Speculator's Unemployment Rate Chart; US Labor Recession is 23 Months Along and Counting

THE UNITED STATES LABOR RECESSION STARTED ON 9/8/23 AND IS 23 MONTHS ALONG AND COUNTING; NEXT MONTH IT WILL BE 2 YEARS!!

The country also remains in a housing recession and manufacturing recession (manufacturing lost another 11K jobs in the latest report) 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 15 years of Fed money-printing, remains robust. Also, the AI (artificial intelligence) hype and excitement delays the onset of the overall US recession.

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. Employers begged for workers during 2022 and 2023 and into 2024 but not so much anymore in 2025. People that are losing their jobs nowadays are saying it is very difficult to find another job.

Companies and businesses 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.

Trump buckled and backpedaled on his tariff threats in April to prevent the stock market from falling further and more importantly, foreigners were losing confidence in the all-mighty US dollar and in treasuries (TACO; Trump Always Chickens Out). The orange head proclaimed a 90-day period for tariff talks, that then was extended to 8/1/25. 

For the 8/1/25 jobs report, a paltry 73K jobs are reported but the big news was that the two months of prior revisions were taken down by 258K jobs painting a sick labor market picture for the last three months. The unemployment rate, the Fed's key stat, moves higher from 4.1% to 4.2%. Most of the jobs were in the healthcare sector.

King Donnie does not like the jobs numbers that indicate a lackluster economy so he shoots the messenger. King Cry-Baby calls for the firing of the BLS Commissioner Erika McEntarfer. It is concerning that the orange baby would go ballistic so fast over data and make a quick irrational decision in a few minutes time. You would rather see a man with a calmer mind making decisions instead of a petulant adolescent that did not get his way. No wonder his approval rating is slipping.

The unemployment rate is for all the marbles. In the spring and at the last Fed meeting, Chairman Powell could not have been clearer about focusing on the unemployment rate. The Fed will not act to lower interest rates unless the US unemployment rate moves above 4.4%. This was the thinking from springtime but considering the daily pressure that Trumpski applies to Powell's thin shoulders, any number at or above 4.3% will likely cause the Fed to begin a rate-cut path.

The worry, however, is stagflation. The 1970's was a great decade for music, like Zep and Rock and Roll, it feels like yesterday, but the stagflation was killer and doomed President Jimmy Carter, who is often ridiculed in the media as a horrible president, but he was the last president that actually cared about common Americans. In the 70's, jobs were scarce and if you worked it was for peanuts. At the same time, prices went up and up; stagflation. This is likely our fate in 2025 and going forward.

A cash society was rampant in the 70's to avoid paying tax on items and services (this is why central banks in 2025 want a CBDC, central band digital currency, so they can make sure you pay every dime of tax while also controlling your life). The division between the have's and have-not's, the rich and poor, in America currently is the widest it has been since the 1970's when a routine mantra spoken by common folks was, "F#*% the rich." Let the modern-day class-war begin.

The Fed's mandate is price stability and maintaining low unemployment but what do you do when both are going in the wrong direction (joblessness increasing while inflation increases)? The Fed cannot cut rates to help with the housing and job markets if inflation runs higher due to the Donnie Trump Trade and Tariff War. Comically, the guy creating the inflation with his tariffs, King Donnie, is yelling at Powell to cut rates.

The Fed is likely less concerned about inflation on the margins and more concerned about growth and jobs thinking that the 4.3% or 4.4% and higher unemployment rate is the trigger-point to cut rates. 

The stage is set for the 9/5/25 jobs report. Will Donnie pull more jackass stuff and fire the new BLS head of statistics if he does not like the numbers again? Comically, his orange head will turn red going forward when the employment numbers start printing negative numbers. The current unemployment rate is 4.2% on the verge of 4.3%. The actual number is 4.248%. All of you remember high school math class and rounding numbers, right? If the rate was only 0.002 higher, that is two-one thousandths, it would have been 4.25 and rounded-up to a 4.3% rate. Put that in your pipe and smoke it.

The unemployment rate tagged 4.3% on 8/2/24, one year ago, and it looked like it was going to take off higher but alas, it fell back down and has bumped along in that sideways channel ever since. If the rate tags 4.3% and higher on 9/5/25, the Fed will likely cut in September and little baby Donnie will be happy.

Note how the rate has come down to touch the signal line four times over the last 23 months but the labor recession remains in play and now the blue line is again moving up and away making the 9/5/25 numbers even more important. When the unemployment rate moves higher, it is typically not gradual, instead it pops up strongly and that is what Powell and the Fed are worried about. It will likely pop higher in the next report.

Projecting the data forward, if the unemployment rate pops to 4.3% or 4.4% or higher, a big jump from the current 4.2%, bells, horns and whistles will sound at the Eccles Building. The Fed will be open to rate cuts starting in September so King Donnie will be happy for the bad news. If the rate remains at 4.2% or if it dips to 4.1%, the labor recession remains in play although it will be teetering on recovery and a happier jobs picture ahead. If the rate drops to 4.0%, that will signal a labor recovery and the end of the near 2-year labor recession (unlikely outcome).

Eastman Chemical reported disappointing results. Do you remember naughty Mrs Robinson? In the movie, Ben was told one important word, "Plastics." One of Keystone's many hats is a chemical engineer and when the chemical companies flounder, you got problems. The chemicals, resins, paints and other goodies in those tanks are the building blocks of the entire economy.

Fed Governors Waller and Bowman dissented against the Fed decision to remain on hold with rates. The two favor a rate cut now. Both are concerned about the labor data and are puffing their chests out after the jobs data yesterday. Waller is criticized for auditioning for the chairman job if Powell leaves before his term ends in May. Waller says the labor market is showing signs of weakening and the wait and see approach is too cautious of a posture (so a rate cut cycle should begin now). Bowman says she is worried about a deterioration in the labor market and prefers taking a proactive approach (and cutting rates now and going forward).

Now you have the full story folks. Get your popcorn ready for 9/5/25 circus. If you listen closely, you can hear the ongoing Trump administration calliope music in the background.