These days, its really hard to find worrying signs in US labor data. If one looks at the once famous Janet Yellen Labor Dashboard, apart from Job Openings, everything looks to be progressing fine, bar a small pullback here and there:
Sure, the employment-to-population ratio (participation) has not come close to peak achieved in the last business cycle but everything else has.Even the equal-weighted 52-state US national average unemployment rate has been falling nicely to multi-decade lows. But dig a bit deeper and lift the hood on this state unemployment data and you get a shock:
An increasing number of U.S states, in some cases more than half, are reporting rises in their unemployment rates by the 3 main measures we look at, namely:
- net percentage of states with rising unemployment,
- percentage of states with unemployment higher than low of the last 6 months
- percentage of states with unemployment higher than prior month.
The rising of these breadth metrics are strong leading indicators for the future direction of the aggregate nationwide unemployment rate and whilst multi-year rises below 50% are common, such as we have witnessed from 2014 to 2019, it’s when they persist in greater than 50% territory that one starts to have serious introspection about the U.S economy.
We’re not there yet but this bears watching closely.
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