Again, I’m liking last Friday’s employment numbers, plus a few other data points have improved lately as well; our macro index went from -8.14 to -2.30 over the past week. Although I think some bullish pundits who’ve declared last Friday’s unemployment number (a lagging indicator by the way) as proof positive that the bears are off track are either overlooking or are unfamiliar with history.

The blue line represents the unemployment rate (inverted), the gray-shaded areas represent the past 11 recessions; note how closely recession tends to follow a change in trend:





Like I keep saying, we’re watching the employment data very closely, as it rolling over will likely be the all-clear signal for the next recession. 


And while, again, the unemployment rate is a lagging indicator, capital spending plans is a forward-looking one. The following is a red flag:

“Factory executives forecast capital expenditures will decrease 2.1% in 2020, which if realized would be the first annual decline in 11 years, according to a semiannual survey from the Institute for Supply Management released Monday.”

I.e., businesses anticipate cutting expenses for a reason, and if present trends don’t begin to reverse (which they could), they’ll no doubt sooner or later be looking to cut their biggest expense of all, which is labor.