Unemployment in Target Zone Warns of Change

The behavior of unemployment warns of a coming recession.

US unemployment rate has fallen from a correct model signal made in 2010 into a target zone that warns of a coming recession.

In 2010 a forecast was made for a decline in the unemployment rate into late this decade. In 2011-2012 the rate did not fall as fast as forecast. The political side made a big deal of the slow-paced decline. QR opinion was to give the cyclical trend time. From 2012, the rate sped lower and moved below objectives set for 2017-2018. The model gets an extra star in performance when an objective is surpassed.

During the late 2030s to early 2040s, this cycle will coincide with a super cycle peak that could lead to a Great Recession or the first depression since the 1930s. Until then, the 9yr cycle should reflect normal recessions. Perhaps a mild one will occur during the next few years.


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