Rising Unemployment is Warning of Recession
Sahm rule triggered
The job market is showing further signs of strain. The unemployment rate has risen to 4.1%, up from the low of 3.4%. Jobless claims have continued to rise across the US. People are working more Full Time Jobs than every before. Job Openings are sharply dropping. AND, our current employment situation is trigger recessionary warnings.
The Sahm Rule
The Sahm Rule is designed to identify the start of a recession using changes in the total unemployment rate. It says that when the three-month moving average of the jobless rate rises by at least a half-percentage point from its low during the previous 12 months, then a recession has started. This rule has signaled every recession since 1970. With the U-3 rate having risen from 0.5 percent in July 2023 to 1.0 percent in June 2024, the Sahm Rule has been triggered.
Employment Composite Index based on 7 indicators is signaling for a recession.
(This is from Nov 2023, Look Where Their Composite Was Then. Source)
This index puts together information to picks up shifts in the labor market. These shifts are reduced demand for temporary help, increases in initial and continuing jobless claims, changes in the composition of the employed (for example, part-time “for economic reasons” because full-time work is unavailable), changes in the duration of unemployment, and declines in aggregate hours worked.
Multiple Full Time Jobs At Record Levels
Source( Multiple FT Jobs, Multiple Jobs)
On one hand, many individuals are struggling to secure employment, while on the other, some are working multiple full-time jobs just to cope with the inflationary price increases experienced in recent years. It shows how bifurcated our economy has become and how our middle class is being crushed.
Job Openings
Job openings have been falling off a cliff. Declines like this have only happened during 2000, 2008 and 2020 Recessions. Each decline has ended with sharp economic downturns.
Continuing claims
Continuing claims have risen to 1.85 million, up from 1.83 million, marking the ninth consecutive week of increases. This trend suggests that many unemployed individuals are finding it increasingly difficult to find new employment. As job openings continues to drop, this will continue to rise. This trend is lining up with unemployment rates rise as well.
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