Labor Market Worries

The Leuthold Group’s Doug Ramsey is concerned that the labor market is well on its way to falling into a recession. Employment growth has run below 1.4% for eight consecutive months, suggesting the economic expansion is stalling out. Announced layoffs in February spiked to 172,000. Ramsey states that a 10% increase in the number of unemployed has been a reliable indicator of a recession.

Real personal disposable income growth has slowed to 1.8%, down from 3.7% a year ago:

Source: Leuthold Group

Ramsey argues that the main bulwark against a recession has been the continued rapid growth of the stock market. This pillar, already weakened since February, has deteriorated further after President Trump’s announcement of a new wave of massive tariffs. A further downshift in markets from a correction of 10% to a bear market of 20+% may signify the toppling of the economy into a recession.

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This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument or investment strategy. This material has been prepared for informational purposes only, and is not intended to be or interpreted as a recommendation. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice.