These two leading indicators suggest a U.S. recession has already begun, according to Wall Street's favorite permabear

By Joseph Adinolfi

Wall Street's favorite permabear is back with a warning for anybody who believes the U.S. economy is destined for a "soft landing" in 2024.

In his latest note to Société Générale clients, Albert Edwards, the Société Générale global strategist widely followed for his bearish takes on the economy and markets, highlighted two leading employment indicators that have preceded economic downturns in the not-too-distant past.

These should help convince skeptics that the recession that Wall Street has been waiting for since early 2022 might still be in the cards, he added.

Firstly, employment in logistics jobs like trucking has cratered this year as pandemic-related overhangs in demand for goods have persisted.

"The logistics industry happens to be one of the best cyclical canaries to have down your coal mine. We have previously shown that falls in trucking jobs normally precede recessions," Edwards said.

But if that isn't convincing enough, Edwards pointed to the temporary-help subset of services employment, which has also seen a decisive downturn this year, mirroring a pattern that played out ahead of recessions in 2001 and 2007.

"Before the 2001 and 2007 recessions, the temporary help series turned decisively down some 12 months ahead of recession. Hence the soft-landing adherents should be worried that it has been sliding relentlessly since October 2022. Adding 12 months or so to that that takes us to... um...today," he said.

The U.S. labor market has shown signs of slowing from the postpandemic period, with the unemployment rate ticking up to 3.9% in October, the highest level since early 2022.

See: Jobs report shows 150,000 new jobs in October. U.S. labor market cools.

Data showed the U.S. added 150,000 new jobs in October in a sign that the Federal Reserve's aggressive interest-rate hikes since March 2022 are starting to have their intended effect.

-Joseph Adinolfi

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11-22-23 1507ET

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