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Recession alert: 70% of US population living in states with rising unemployment

Recession alert: 70% of US population living in states with rising unemployment
Ana Zirojevic

After macroeconomist Henrik Zeberg alerted his followers of an increasingly dire outlook in line with recent economic indicators, more danger signals for a major recession are beginning to show their faces, including the declining labor market rates in the United States.

Specifically, investor and analyst Puru Saxena warned that the recently released state-level unemployment figures have only been this high during a recession, as he referred to the chart by Arch Capital Group’s chief economist Parket Ross published on January 24.

Unemployment rates across states. Source: Puru Saxena / Parker Ross

High recession indicators

Indeed, as Ross remarked, the state-level Sahm-Rule indicator, which signals the start of a recession, was currently “above the threshold that marked the onset of every recession since the 1970s,” adding that, by December, 20 states had triggered the Sahm Rule, “up sharply from just 3 states in September.”

At the same time, Saxena observed that 70% of the US population lived in a state with rising unemployment on the year-on-year (YoY) basis (green line), which historically, “has been a leading indicator and the unemployment rate (black line) has lagged,” on the RecessionAlert chart.

Unemployment data. Source: Puru Saxena / RecessionAlert

As a reminder, Henrik Zeberg cautioned of the strong possibility of a major recession and the largest market crash since 1929, citing several alarming indicators such as the Business Cycle Model crashing beneath equilibrium and a decline in housing, which historically led to increased unemployment.

It is also important to note that Saxena, Ross, and Zeberg are not the only influential people in the finance world sharing the view of an impending crash. In particular, Robert Kiyosaki, the author of the best-selling personal finance book ‘Rich Dad Poor Dad,’ has also repeatedly warned of a depression possibility.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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