Economic Uncertainty and Job Market Indicators

A significant theme in recent economic discussions centers around signs of a potential recession, notably indicated by the SOM rule. This rule suggests that early stages of recession are indicated when the three-month average unemployment rate surpasses the lowest average over the previous year by at least half a percentage point, which has officially occurred. Recent economic reports showcased disappointing job growth, adding only 114,000 jobs in July—much lower than the anticipated 185,000—and an uptick in the unemployment rate from 4.1% to 4.3%. Coupled with a decline in consumer spending due to inflation and high interest rates, these job market indicators contribute to an escalating narrative of economic fragility.