A Recession Indicator Having A PERFECT Record For 70 Years Is About To Be Triggered

by | Feb 21, 2019 | Headline News | 27 comments

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    The unemployment rate has been a perfect forecaster of a recession in the past 70 years, and it appears to be edging closer to triggering that signal.  “It’s never been wrong. It’s something to watch,” said Joseph Lavorgna, chief economist for the Americas at Natixis.

    As the unemployment rate hovers around 4% (the number reported in the mainstream media) a more accurate unemployment number is 8.1%.  This takes into account those who have given up on finding work and those who are underemployed (workers who are part-time but want full-time employment),  This more accurate unemployment number is called the U-6, while we often hear the U-3 reported on the news. But even former Federal Reserve chair Janet Yellen says the U-6 is a much more accurate indicator of where things are with regards to the economy.

    According to Lavorgna, since 1948, the economy has always entered or been in a recession when the unemployment rate increased 50 basis points (or 0.50 percentage point) from its trailing cyclical low. Lavorgna added that a recession has occurred in all 11 instances regardless of the level of unemployment, according to CNBC. He pointed to the example of a recession in 1953 when the unemployment rate rose to just 3.1 percent, and in 1981 when the cyclical low in the unemployment rate was high at 7.2 percent.

    The unemployment rate which was reported February 1, rose to 4 percent in January from 3.9 percent. It is currently 30 basis points above the low of 3.7 percent reported in November.  Based on simple math, the unemployment rate is close to triggering a recession indicator. But Lavorgna says the chances are still only 1 in 3 that that happens.  “The current rise is notable and would be troubling if it continues,” notes Lavorgna. “The recent increase in the rate has been due to rising labor force participation, which is a sign of economic strength, not weakness.” According to CNBC, the reason the unemployment rate has risen is actually a good thing.  The long-term unemployed are returning to the workforce and looking for a job. “Generally job growth is positive just before a recession,” said LaVorgna.

    This isn’t the only indication that a recession is creeping up on the United States.  Other signs are there if you choose to look past the glassy-eyed talking heads in the media. Retail sales were so bad in December of 2018, that many say it had to be “suspect data” and not the simple fact that the economy isn’t as strong as many would have you believe.  If the data was not suspect than a recession is on the way. And with retail stores closing at an alarming rate, it isn’t surprising to hear retail sales have dropped.


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      1. The unemployment rate is based upon CENSUS DATA ESTIMATES and a small employer sampling of less than 1%.

        In other words, CNN is more factual than any data coming from the US Government, but both are total garbage as they have the means to produce factual data but choose to run total distortions.

        The only thing certain is the US gov will continue spending, creating new debt, and all that money gets laundered through Wall Street.

        Dow Jones 100,000, S&P 10,000, National Debt $50t all by 2040.

        Crash… what crash???

        • Dow Jones 100,000, S&P 10,000, National Debt $50t all by 2040.

          That is likely to happen.

          Half the reason the stock market is going up is because of inflation. The stocks see inflation too.

          • That is largely correct. The QE money that went to banks loaned it to companies at ridiculously low rates. They bought back their stocks (at one time under Glass-Steagall that was illegal felony stock manipulation) which is now legal. This was “supply and demand” removing shares from circulation, the increased rise warranted bonuses for the various Boards Of Directors, CFO and CEO.

            It’s all phony.

          • If inflation wasn’t mostly taking place in the Stock Market, it would be throughout the economy with everything doing the same as the housing market and becoming almost unaffordable for the average working class people.

            • The QE money did support food stamps and the like but it tended to avoid being put in the middle class hands as much of the supposed “shovel ready” projects were not funded. The stock market rise previously described is linked to housing. I know of many suspicious of the stock markets future that bought 2nd homes or “traded up”.

        • Equipment on our power poles is rusted and starts smell on chilly nights. Sewers and gas smell at the intersections, when the most people would tend to be at home. Road wear. imho, the use and rate of repair of infrastructure is somewhat based on these census numbers, where only the typical number of people are expected to be living there and tied into the grid.

          • Simple: This country is a massive DISASTER & is absolutely falling apart. WTF do they do with all the excessive amounts of $$cash they burn through – it is most definitely NOT being put back into streets, highways, airports, etc, etc, etc. My God this place is going to crash & burn like no one has even seen in history.

            • I understand that it goes against the spirit of a news blog, to say this, but you could completely turn this off, and your own two eyes would be a great indicator.

              There is rarely a satisfying explanation for what is happening in your own personal space.

      2. I have a small window in my cabin that overlooks the base of a mountain. I cannot see anything beyond. Just like this chart.

      3. Recessions are no big deal. They happen all the time. Wake me up when it is a depression or a Weimar Republic inflation.

      4. This game has no end in sight. Keep on doing what you’ve been doing.

      5. If you don’t believe that a comfortable living wage is expected in the first world, then said that unemployment is around 4%, shame on you. Your workforce lives ten to a house, around here. What about the single wage earner household, where only one family lives there.

      6. If you don’t believe that a comfortable living wage is expected in the first world, then said that unemployment is around 4%, shame on you. Your workforce lives ten to a house, around here. What about the single wage earner household, where only one family lives there.

        • The US we the 50+ age group were raised under was largely the outgrowth of WWII. For the roughly three decade period post WWII the US was “King Of The Hill” while the developed world rebuilt. Shortly after that rebuilding and its subsequent competition the undeveloped world started adding in its billion plus population at ultra low wages, devoid of civilized safety and environmental regulations into the equation. Free Trade helped grease the treads for the latter. The “Greatest Generation” seen the very worst (Great Depression & WWII) and also the very best the US had to offer.

          • Our workarounds and urban pioneering mindset share more in common with earlier generations, who were more desperate, more practical, and more cynical of authority.

          • Yes for a short time we where a once in history Anamoly. after WWII the USA became the worlds producer,s and The monopoly along with Unions created the Middle class. The Decline began when that 3ew Kissinger helped the Arabs to form OPEC and the fake gas shortage in the 70,s was created. After that the gas guzzling USA made vehicles had competition. And unchecked inflation took off. The former mostly white manufacturing Blue Collar middle class is almost extinct. There is a war on the White Male being waged. And both political partys are part of that war.

            • Old Guy

              The US spent like a drunken sailor (no offense to either drunks or sailors) funding the Marshall Plan & rebuilding Japan (globalism), MIC (Vietnam) and the domestic “Great Society” (Johnson). With gold leaving the treasure the Bretton Woods agreement was abandoned in August 1971. The US dollar, now purely fiat would loose massive value as it was no longer internationally redeemable for gold at a fixed $35/Oz. A deal was cut with OPEC that they would exclusively take only the US dollar for oil. Instantaneously the US dollar had a created, false but functioning backing. Nations needing oil needed US dollars. The UD dollar value was secured. Now comes 1973 and the price of oil triples. The DEMAND FOR US DOLLARS just tippled. We got tolerable (abet painful) inflation but the US dollar was saved and the entire world became a sink for excess dollars that were being devalued daily.

              The above is a scam but a brilliant scam. It’s now the core of the US economy and nations are overthrown and wars fought to maintain this “exclusive privilege”.

              • Kevin is 100% correct. The thing is the whole kit and caboodle was engineered and put in place by 3ews. And they are the bankers who run the fed and benefit the most. I don’t like them very much.

                • Naming myself, here, but I find that most people are incapable of making flat, arbitrary decisions, in business, and just going with it. It’s called executive function, in the medical dictionary.

                  I have about 3 to 4 needy people, at any given time, who want me on call. Goal setting is something taught to school children and menial laborers.

                  (Phone rings, in the background.)

      7. A recession sounds good to me. A long as my (Fixed Income) Social Security Ponzi Check keeps getting deposited I really don’t care. A recession would slow or maybe stop the Inflation that has been Robbing me. a Depression would reverse that inflation. And some types of buisnesses do better in a Recession. A junkyard will sell more used parts. Anyone who repairs and fixed things gets more business. anyone selling used stuff gets more business. because folks fix what they have or buy used instead of replacing it with a new item. Even pawn shops do better in hard times.

      8. After watching the movie, “The Real Cost” on Netflix, I began to think about the fashion industry and the so-called low prices of clothing. In the third world, workers are beginning to organize and unionize for a living wage.
        Clothing is about to become much more expensive. The industry claims that giving workers a descent wage will hardly make any difference in the prices, but that just can’t be true.

        If you haven’t already prepped for clothing and shoes, I think you should get on it. Remember that children grow and you will need to purchase for their future needs.

        In the past, all women were expected to know how to weave, spin yarn, and sew. I think that those skills are going to become much more important in the future and that there will be opportunities to make a living.
        Well dressed people have their suits and dresses made from a pattern that is designed to fit them perfectly, not mass produced and sold off a rack.


        • After the 2008 crash, I noticed off-the-rack clothing began to be made with even cheaper goods. Most items barely made it through the season. Yard goods weren’t much better. Since the economy “recovery”, most off-the-rack clothing is still made with incredibly cheap materials but yard goods seem to be back to good quality although you still need to inspect the goods well before purchasing to be sure of what you are getting.

          A few things maintained their good quality such as name brand threads and batik fabric.

          The cost of patterns is still nose-bleed high so I only purchase occasionally when JoAnn’s has a $2 or half off sale. Most of my basic patterns work just fine and it’s simple to make alterations for personalizing. Or go back in my archives to mix-and-match to create a current looking item.

        • Good luck convincing modern women “how to weave, spin yarn, and sew”…. most of them can’t even cook; nor do they have any interest in learning any of these things.

          Domestic skills are scorned as “sexist” and “demeaning”. Having spent their lives observing fantasy lifestyles on movies and TV, women want a life filled with travel, leisure, and dining out.

          When the big re-set arrives, few of them will have useful skills for survival.

      9. I am SO glad that I do not have any children to bring into this steaming pile of feces known as the United States – this place will fail, there is NO doubt in my mind and for so many different reasons. A massive amount of the population is scum garbage and serves no good purpose at all and many haven’t had any decent manners or sense of right and wrong for 40+ years and on and on. . .and down the toilet it all goes. I guess enjoy what is left guys.

        • Dear Concerned Citizen,
          I understand your mindset, but as bad as the US may be in your eyes, some of the bigger piles of feces are the 130 other countries around the world. It is a shame about our population…I am always so saddened to see people waste their lives…druggies, loafers, thieves…the numbers are staggering…perhaps 30% of the 330 million could just ‘go away’ and the rest of us wouldn’t even notice. I have watched the decline starting in earnest in the 60’s. We have always had bums and hobos, but since the 60’s, the slide to worthlessness has been on the rise. Move to the countryside and hunker down. Canned goods and ammo!

      10. I’m back

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