Paychecks are essential to life. Unless you’re some sort of trust fund baby, you don’t really get a Paycheck without having a job first, so we keep a close eye on things that have to do with jobs. Unfortunately, there’s a bit of a storm cloud on the job horizon. It’s not a certainty, of course, but we think it’s worth mentioning.
Here are Five Fast Facts about the US job market being in the “danger zone”:
- 🌧️ Gloomy Gus - Overall national unemployment rose to 4.1% last month. That’s the highest it’s been in the last three years. Some forecasts say we’ll see more job losses over the next few months, pushing unemployment up over 5%. The New York Fed says we have a 56% chance of going into a recession in the next year. I wonder what these guys would forecast if their Paychecks were tied to successful predictions?? 🤔
- 🤏 Smart Lady Says - Claudia Sahm is a former Fed economist and the creator of the historically accurate Sahm Rule, which says that a recession has started when the unemployment goes up noticeably (0.5%) more in the last three months than in the previous year. The Sahm Indicator is now at 0.43%. Too close…
- 🌪️ On The Edge - Sahm is quick to clarify that we’re not “on the cusp” of a recession, just that the conditions are a yellow flag. For those of you living in Tornado Alley, we’re in a watch, not a warning. 👍
- 👀 If Then - Last month there were over 200k new jobs added (though we know how that goes, don’t we?), and as long as hiring stays strong, we should be okay. But if we have a sudden spike in layoffs or dip in jobs, unemployment will go up, and that could push us out of the danger zone into an actual recession.
- 😣 Complications - Sahm cites some of the complications to strong hiring being jobs going to cheaper immigrant workers rather than Americans and slower-than-expected job growth on the state and local levels. So yeah, maybe a wall wasn’t such a bad idea after all…?
🔥Bottom line: It’s literally impossible to predict the future with perfect accuracy. Even when people have demonstrated they are usually correct in their predictions, well, stuff happens, and that changes the equation. Heck, a lot of people thought we’d fall into a recession months ago and it hasn’t happened yet, so that’s good news! But this is definitely something to keep an eye on.
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