- by New Deal democrat
As I wrote several months ago, the Labor Market Conditions Index is a good leading indicator for YoY growth in employment. Based on its deceleration, I forecast that monthly jobs growth was likely to decline to less than 200,000 in the months ahead.
Here's the graph I ran at that time:
The LMCI was updated earlier this week, and the news isn't good, with the Index coming in at zero. So here is an updated look at the same relationship, zoomed in on the last 10 years:
The LMCI is forecasting further YoY deterioration in jobs growth. Even a few 5-digit increases cannot be ruled out. The silver lining is, it is not forecasting an outright YoY decline in jobs. Similar periods of weakness occurred in 1984, 1994, and 2002 without there being a recession. Even in those periods leading up to recession, generally speaking the LMCI crossed zero into negative territory well before the recession began.
Bottom line: not good news, but this expansion isn't Doomed yet.