While mainstream media clung to The White House spin of record monthly streak of jobs gains after Friday's payrolls, The Fed's own Labor Market Conditions Index (LMCI) paints a very different picture of the health of the American job market. With a 0.3% drop in December, the LMCI is now down 5.8% year-over-year, the biggest plunge since Jan 2010.
We are sure The Fed wishes it never created this index…
As we noted previously, that's only the eighth time in nearly 40 years the index was down on a year-over-year basis, Deutsche Bank Chief U.S. Economist Joseph LaVorgna wrote in a note to clients today. Of the seven previous occasions, LaVorgna wrote, "four were soon followed by recession."
(In the three other cases, two were false alarms, in 1986-87 and 1995-96, and in 1981 the recession began shortly before the annual change in the LMCI turned negative.)
LaVorgna said the weakness in the LMCI indicates a rising possibility of recession.
"The upshot is that the economic outlook remains fragile despite the ostensible robustness of the labor market," he wrote.
One look at the historical revisions (notably the last few months) and it's clear, however, every effort is being made to improve this data…
Perhaps the economy being handed to Donald Trump is not as 'awesome' as some would suggest?
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