The Strangest Job Market Collapse in History Has Just Started…

The National Bureau of Economic Research has a very specific definition of what they classify as a recession. This is the very one they use to officially classify economic recessions in the U.S. And according to their own definition, the very first determining factor of a recession is unemployment. Currently, 25 states across the U.S. have a rising unemployment rate. This is something we haven't seen since 2020 and before that 2009. Just over the course of the last two years, we've seen the national unemployment rate go from 3.4% to 4.3%. And going back to the 1960s, we've never seen the unemployment rate rise by almost a full percentage point without the NBER classifying it as a recession. So why has the NBER not signaled the start of a recession, and could they be about to? There's only a few hours left to take advantage of the extended discount that we did for our fifth birthday. So if you want a full year of access to our entire trading strategy, each and every one of our trades for a fraction of the price, you can go to our website to take advantage of it. Don't miss this last chance. It's not just the U.S. that has seen its unemployment rate rise. This is something that we've seen across the world. In Canada, the unemployment rate has risen to 7.1%. In Germany, it has moved up to 6.3%. And in the U.K., it now stands at 4.7%. And it's not just unemployment. We've seen other very typical recessionary signals over the last year. Consumer confidence in the U.S. is currently at levels that has only been seen during the worst economic downturns in history, as shown by the University of Michigan survey. At the same time, we also saw a bear market in stocks in early 2025. Although it might have felt extremely short, the average stock dropped 35% during this market decline, which is what can typically happen during a recession. All of these data points have naturally pushed many economists to jump the gun and actually say that we've been experiencing a that the NBER is just too slow to react this time. Indeed, historically, there is a 7.8-month lag between the start of a recession and the moment where the NBER actually announces it. Many speculate that we're currently in that period. But first, let's take a look at the other three factors on the NBER's list. Industrial production has flatlined since 2022, but it has not contracted as typically witnessed during recessions. Real personal income has kept on growing at a steady pace throughout 2024 and 2025, and the volume of sales in the manufacturing and trade sectors has actually picked up recently. These three other metrics are all practically at all-time highs, not exactly what you would expect to see during a downturn. Not to mention that U.S. GDP has continued to hover between 2 and 3% for the last few years, never dipping below zero into contraction. Going back to the 1960s, most recessions were marked by GDP contracting on a yearly basis. The one exception to this was in 2001 when the economy slowed, but GDP never actually turned negative year over year. So, for now, it seems quite unlikely that the NBER would actually label this as a recession just based on the unemployment rate rising. That would be completely ignoring the other three metrics that they pay attention to. But that doesn't mean we can't quickly get there. After all, if 25 states in the U.S. are seeing job losses, we should be metrics to begin rolling over, right? Again, this requires nuance. This chart shows the percentage of states that have a rising unemployment rate any given month. Right now, the percentage of states with a rising unemployment rate is actually declining, so more states are actually beginning to see their unemployment rate fall back down. That's the opposite of what we usually see heading into recessions. What typically happens is that more states experience a rising unemployment rate, and the moment where this indicator peaks and begins to come back down, that tends to actually coincide with the moment where the unemployment rate begins to fall. What's happening today actually looks more like what occurs after a recession ends, as we saw in 2020, in 2009, in 2002, and in 1991. All of these were followed by a peak in the unemployment rate and a subsequent decline in the months that followed. And this story fits very well with what we're seeing on the U.S. stock market. It has been on the strongest rally since 2020, and before that, 2009, both of these stock market rallies occurred right before a peak in the unemployment rate. And these rallies in stocks proceeded to last for multiple years as unemployment declined back down, making these initial rallies actually mark the beginning of multi-year economic recoveries. This is certainly a narrative that we're seeing being spread on the news and on social media right now. We think this narrative may be flawed once again, because the recovery that we're experiencing in the economy and the market is no ordinary one. Historically, recessions are marked with an uncontrolled rise in the unemployment rate. These are periods where businesses are seeing their earnings collapse and layoffs are spiking. This kind of sharp economic pain forces the Federal Reserve to cut their interest rates violently in order to stabilize the economy, as you can see right here. In a way, the Fed is panicking in these moments, trying to stabilize the economy at all costs. As a result, the Fed typically keeps rates low for an extended period of time, which allows the recovery taking place to last multiple years and hence drive the stock market to great heights as a result. Today, the situation is quite different. The rise in the unemployment rate has been very steady and controlled, and we've not witnessed a complete break in the labor market like in a recession. This also means that the response from the Federal Reserve has been a lot more muted and controlled. We've seen the Fed thoughtfully lower interest rates as the unemployment rate has risen. If, all of a sudden, the unemployment rate were to turn back down, it's likely that the Fed would stop lowering their interest rate, and depending on inflation, they could even consider raising their interest rate once again. Inflation in the U.S. is still running above the Federal Reserve's For now, this is not the case. The Federal Reserve is cutting interest rates and is projected to continue doing so in response to the rising unemployment rate, which is why we actually think that the stock market could have a lot more room to run in the coming months. But things could change very quickly. Calling this a brand new bull market, or even worse, a new multi-year economic recovery, is very much a stretch. The Federal Reserve could quickly turn their monetary policy around and stop this recovery dead in its tracks. That's why we believe the Fed is the single most important factor to watch in today's market, and we're adapting our level of aggressiveness to the market depending on what we believe they're likely to do next over the next few months. If you want to stay up to date on our exact trading strategy across stocks, crypto, commodities, make sure you don't miss this last chance to take advantage of the discount that we're doing before it runs out. We've been doing very well with our trades in this stock market recovery, making some pretty incredible returns, and our entire team works day in, day out to make sure that our clients get access to the highest performing research and trades possible. You won't regret it. Thank you for watching.