The monthly employment report gets all the headlines, and in September, job growth did slow somewhat. But Federal Reserve Chairman Janet Yellen likes to follow another, broader measure of labor market health. If you’re a glutton for punishment and econo-wonk-speak, you can read about it here. But suffice it to say it tracks 19 separate indicators and is therefore much more comprehensive.
So what’s it saying? Nothing good. The index dropped to negative-2.2 in September from a downwardly-revised negative-1.3 in August. The index has now been negative in 8 out of the last 9 months. As you can see in the chart below, that has NEVER happened outside of the early stages of a recession. Does this suggest we’re heading into a deeper downturn? My credit cycle indicators are pointing in that direction, but only time will tell.
