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Recession Under Way?

Our take on recent and upcoming economic reports.

Last Week
Employment, housing, and consumer spending indicators continued to suggest a recession in overall economic activity is under way in the United States.

Labor Markets. The latest BLS report indicated that U.S. nonfarm payroll employment declined for the sixth consecutive month in June. Since the 1960s, we've never had a string of six monthly declines without a recession being under way at the same time. Within the overall results, employment in the temporary-help services industry (a fairly reliable leading indicator, particularly on the downside) continued to decline in line with the pace earlier this year. (Note: The annual benchmark revision to the payroll data arrives in February each year. The data are revised as the BLS adjusts its sample-based estimates to more complete "universe" counts from unemployment insurance tax records that are available only on a lagged basis. This annual revision can sometimes be dramatic, especially around economic turning points. The BLS releases a preliminary estimate for this revision in early October, and significant downward revision is possible.) In the separate BLS household survey, the unemployment rate remained unchanged at 5.5% in June, but only after spiking higher from 5.0% in April to 5.5% in May. The unemployment rate's most recent low came in March 2007, at 4.4%, and the increase in the unemployment rate since then has been in line with the increases in past recessions.

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