When Unemployment Ticks up 1/2% = Recession (Patreon)

The U.S. job market sent a mixed message in October: 150,000 new jobs added, but the unemployment rate crept up to its highest point since January 2022, hitting 3.9%. There's a bit of economic folklore to consider here: if unemployment ticks up by half a percent, a recession might be knocking on the door. The uptick from April's low of 3.4% to September's 3.8%, and now October's 3.9%, could be a cause for concern.

Goldman Sachs and economist Claudia Sahm have smoother measures that aren't flashing red just yet, other signals suggest we keep our eyes open. A large chunk of job growth is in sectors like retail and hospitality, essentially refilling roles left vacant since the pandemic; outside of these areas, the increase in jobs is much smaller. Plus, while businesses report adding an average of 204,000 jobs over the past three months, household surveys hint at a slight shrinkage in employment. When you adjust these numbers for a clearer comparison, you get a monthly increase of just 103,000 jobs — basically half the rate businesses report. So what’s really going on? The job market is clearly full of twists and turns right now.