Warning signs 30year recession indicator accelerating rapidly
Recent economic indicators traditionally used to forecast potential economic downturns are currently sounding alarms due to ongoing uncertainty. Of particular concern is the concerning trend in the labor market, where permanent job losses are rapidly increasing, as reported by the investment research platform Game of Trades in a recent post on June 18th. According to historical data, substantial spikes in permanent job losses have consistently preceded recessions since 1995.
The latest data reveals that year-over-year permanent job losses have reached levels comparable to those seen during significant events such as the Dot-Com bubble, the Financial Crisis, and the COVID-19 pandemic. This sharp increase in job losses has sparked fears of a looming recession in the latter half of 2024.
Furthermore, there are indications that many U.S. corporations are likely to implement mass layoffs. Data from AlphaSense shows a notable rise in mentions of “operational efficiency” over the past two decades, particularly spiking in 2023 and peaking in 2024. This trend suggests a growing emphasis on operational efficiency among U.S. public companies, potentially leading to significant job cuts in the near future.
Despite these concerning signals, the markets currently show a bullish trend. However, macroeconomist Henrik Zeberg has warned that the U.S. economy may be headed towards one of the worst recessions in history. Zeberg predicts a crash in two-year Treasury yields, indicating a recession that could rival the Great Depression of 1929.
The looming question now is when the recession will strike, with many speculating it will occur in the second half of 2024. The upcoming Federal Reserve interest rate decision is expected to play a crucial role during this period.
