This Is What ALWAYS Happens Before a Recession

The new labor market data was just released and I think this report from the BLS just changed everything. I'm gonna reveal exactly what I'm referring to and how I think this report from the BLS is very, very actionable for your portfolio. And I'm gonna do this in one simple, fast step. Step number one, we talk about on this channel all the time, don't we? How the labor market really is the economy. So if we're trying to figure out what's going on here, are we seeing economic growth accelerate or are we seeing it contract and decline, possibly even going into a recession? It all starts here. So let's look at a chart of non-farm payrolls. We go to right around today's date all the way back to 2021. On the left, we go from a negative 200,000 all the way up to a positive 800,000. Now, back in 2021, when we're recovering from the government's response to the Cervasius sickness, not the Cervasius sickness, it was the government's response to it that really crushed the economy. So this is when you get this rebound. So all these jobs being created, but look at the trend, guys. The trend goes straight down to the point where more recently we're seeing negative non-farm payrolls. Payroll jobs averaging 40,000 per month since April. We think there's an overstatement in these numbers by about 60,000. So that would be negative 20,000. So let's go over the actual data. So for November, that was the latest release. The expectations from the market was 45,000. We got 64,000. So I know a lot of you right about now are saying to yourself, well, whoa, George, 64, that seems pretty good. It was higher than expectations. But you guys know from watching my channel that it's not always about the headline number. It's usually more so about, boom, the revisions. And oh, by the way, October came out as well, and it was negative 105,000, that's right. Now, maybe this was due to the shutdown or maybe some leftover Doge people quitting. You could say this is a one-off, but I'd like to point out that, yes, we're getting a negative 105,000, while at the same time, we are seeing absolute negative numbers that don't have anything to do with the government shutdown. So let's go back to these revisions. So this report came out, again, headline number 64,000, but they revised September, right here I got this question mark, they revised that down substantially. Editor, go ahead and put up the actual downward revision. And then we go to August, which was a negative 4,000, and they downwardly revised that to a negative 26,000. So you see, with these revisions, we're not going in the right direction, which begs the question, okay, what's the revision going to be to this 64,000? And even if you really wanna look at the glass half full and stretch the optimism and look at this number and say, well, it was downwardly revised, but it wasn't downwardly revised to a negative number. Oh, just wait, the revisions aren't done yet. And my guess is when everything is sudden done, even this number will go into the red. Oh, by the way, the unemployment rate, that went up to 4.6%. And I'd like to remind all of you watching that at the beginning of this year, we are right around 4%. So we've had a huge increase in the unemployment rate just in 2025, along with what's happening in the headline numbers and the revisions to these non-farm payrolls. And like we said, as the labor market goes, so goes the economy. But in order to really get a grasp of what's going on and why I think this report just really changed everything, we've got to get into the nuance. We've gotta go back in time and look at history. We're gonna do that right now. I wanna start by looking at a chart of payrolls going all the way back to the 1970s and focus on the time periods where we saw negative numbers, or at least consistent negative numbers. And you see this happens almost exclusively in a recession. Occasionally, you will have a negative number, but then it usually rebounds very quickly because that negative number is due to a one-off event, such as a big strike at a huge employer like Walmart or FedEx, or an actual weather event. But especially when you start to see the trend decline, like we see prior to the 1990s recession, prior to the dot-com bust, prior to the GFC, you see that trend decline, and then you see some consistent negative non-farm payrolls that are actually getting worse. That happens almost exclusively in a recession. So are we in a recession right now? I have absolutely no idea, but I think it's very difficult to argue that we're not most likely in an economic contraction. But now let's go ahead and look at the history for the unemployment rate, because this tells a very similar story. And here we're gonna go all the way back to the 1950s, but let's start by looking at what has happened most recently. And the unemployment rate bottomed out, we'll call it June, July, 2023, 3.6%, very, very low. And since that time, like I said earlier, we've gone up to 4.6%. That's a 1% increase. So now we haven't technically had a recession yet, but now let's go all the way back to the 1950s, actually the late 1940s, and see if we can find a time when we had a 1% increase and didn't have a recession. And I could sit here and go through each one, one at a time, but the answer is no. The answer, every single time you see this big increase in the unemployment rate, you get a gray shaded line, which is not just an economic contraction, but it's an actual recession. So this is why the most recent job data for me changes everything, because the narrative out there for so long in the mainstream media and on social media is that the economy is strong and resilient, strong and resilient, strong and resilient. And on this channel, we've been looking at kind of beneath the hood and we're like, what are you talking about? But now this is kind of the Biden moment for the labor market where even the Fed, even the hawks at the Fed, even the Jim Cramer types have got to look at this and say, okay, we're waving the white flag. It is true. The labor market is definitely, definitely in decline. And from there, all you have to do is connect one more dot to come to the obvious conclusion that yes, if I'm admitting the labor market is softening and getting really, really weak, I have to also admit that the economy is doing the exact same thing. Now let's talk about how this is actionable for your portfolio. One thing we always talk about in Rebel Capitalist Pro, which is the private investment community I have for contrarian investors with my good friend, Chris McIntosh, Brent Johnson, Patrick Srezna, just to name a few. Is how important it is to have a macro view first and foremost. Let me show you what I'm referring to. So we talked about the trend going down. We talked about the negative non-farm payrolls, the horrible revisions, the unemployment rate going up. If you think this is going to change, and if you think all of a sudden, because of Trump or whatever it is, that the economy is gonna start to get a lot better, maybe it's data center build outs, maybe there's boom in productivity for AI or something. And you believe that the labor market is going to dramatically improve in 2026. So the trend was like this, but now it's gonna start going like this. If you fall into that camp, then your macro view would be, you're kind of leaning towards growth and inflation expectations increasing. Okay, but now let's assume you have the opposite view, that you look at this trend and you look at the data that we've talked about in this video, and you're like, eh, boy, to me, I think it's most likely going to continue down into the future. And I think we will most likely have an economic contraction if not an outright recession. Well, then you would be in this camp where you see economic growth and inflation expectations declining. Whoa, time out, we got some breaking news here. Oil just dropped below $55 a barrel. It's the first time since 2021, and it represents the biggest decline, annual decline, we have seen in the last five years. So if your base case is the economy's definitely slowing down we might even go into a recession, meaning you're kind of in that disinflation camp. This data definitely strengthens your argument. So why does that matter? Well, if you're in this camp, you definitely, especially over the short term, you want to own things like commodities. Where if you're in this camp, you definitely want to own things like treasuries. Now it doesn't necessarily mean that you're holding those treasuries to maturity, you're just betting that the interest rates go down and therefore the value, the price of that bond or treasury goes up. Now I want to be very clear, this is not investing advice. I'm just revealing some of the very powerful strategies that we talk about in Rebel Capitalist Pro. And I also want to make sure it's very, very clear that you have to define a time horizon. So as an example, if you ask me, George, what's your opinion of what's gonna happen in the next six months? I would probably be in this camp. But if you ask me, what's your opinion of what's gonna happen in the next five years? I would probably be in this camp. So you've got to start with that macro view, but then you have to be very, very specific about your investment or your trade time horizon. But there's a way that you can actually structure this to where regardless of which one plays out, you win. Now, how on earth would you do that? Well, the key here is you do something like a spread trade. And this is something we've actually talked about on the whiteboard videos in the past. And it's something that I've been talking about, well, here at the macro view, in Rebel Capitalist Pro for the last probably six months, nine months at least. And that's when you're actually setting up your portfolio in a way to where you're making money if the spread between the two-year treasury and the 10-year treasury increases. Editor, go ahead and throw up a chart of what the two-year and the 10-year treasury spread has done recently. And you see that that's played out pretty much exactly like it's played out in every one of these cycles where you get an inversion of the curve, an un-inversion, and then you get the steepening of the curve. In other words, the spread really start to increase. And if you want more of these contrarian strategies and insights, and if you want direct access to people like me, Brent Johnson, Patrick Ceresna, Chris McIntosh, just to name a few, you can check out Rebel Capitalist Pro. We'll put a link in the description below.