Editor’s note: This is a lightly edited transcript of the accompanying video from professor Peter St. Onge.
“Recession triggered,” reads the headline from ZeroHedge as jobs collapse, unemployment jumps, and the dreaded recessionary Sahm Rule triggers.
The Fed seems to agree, with markets now predicting a half-point rate cut in September, and two of America’s largest banks—J.P. Morgan and Citi—predicting another half-point cut at the next Federal Reserve meeting just after the Nov. 5 election.
A full point in two meetings qualifies as panic in central banking.
And considering inflation is still in full swing, and the Fed knows rate cuts make inflation go up, that would strongly suggest the Fed is battening down for a hurricane, whatever sweet nothings Chairman Jerome Powell is peddling these days to make sure the normies get blindsided.
The dismal numbers come from Friday’s jobs report, which alleges the U.S. added just 83,000 jobs last month, down from an alleged 206,000 the previous month.
“Alleged” because aside from revisions that come like clockwork, most jobs this year actually may be statistical illusions going by the household survey. Meanwhile, for a year now we’ve seen that the new jobs actually are part-time gigs while we lose almost the exact number of full-time jobs.
Plus, of course, the overwhelming majority of new jobs actually going to government workers, government welfare spending, and imported migrants—I mentioned in recent videos that native-born workers, including native-born immigrants, have had zero job growth since June 2018.
In terms of composition, last month government and social assistance continued their takeover of the economy, hogging nearly two-thirds of all new jobs. The rest of the economy that actually produces stuff, from manufacturing and construction to transport and services, is down to a third.
Tallying it up, official unemployment jumped to 4.3%, the highest since October 2021, when
Bidenflation was running wild. Note that if you include discouraged workers who’ve given up on a job—the so-called U-6 rate—official unemployment is almost 8%, up a half point on the month.
Even controlling for layoffs for Hurricane Beryl, that’s roughly 300,000 new unemployed on the month.
Finally, the jobs number triggered the dreaded Sahm Rule, widely cited in financial markets to predict recessions. The rule triggers when average unemployment goes a half point above its one-year low.
It just triggered.
So what’s next? Going by rate cuts, the Fed is clearly panicked. The question is how much.
If Morgan and Citi are correct that we’re in for a full point of cuts in two Fed meetings, that’s a proper panic. Suggesting the Fed knows a big one is coming or it’s already here—and as always it’s hiding it instead of giving regular Americans the heads-up.
Fortunately, most Americans think we’re already in recession—note that recessions typically aren’t announced until nine to 12 months after they began.
So at least those Americans will be able to protect themselves. Well, they’ll protect their portfolios. Not their jobs.
As for the rest who’re still merrily drinking the Kool-Aid, millions will get wiped out.
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