Labor Market and Recession Risk

Last week, the labor report (Non-Farm Payroll - NFP) was much lower than expected. But overall, the financial markets (especially stocks) reacted overly strongly to this labor report. Partly also due to the timing of the September FOMC meeting being quite close – and this is the last labor report before the Fed makes the decision to cut interest rates.

Interestingly: even though GDP and consumption are still growing well (better than Viet Hustler's predictions), and the labor report can be said to be quite “consistent” with previous months … people are suddenly talking more about recession risks than before.

Of course, Viet Hustler's view remains: recession can completely occur after the election (early 2025) (read more: Soft-landing, recession or stagflation). However, the market being quite sensitive at the current time to data that isn't even as bad as previous months – will easily push volatility higher – possibly creating temporary panic in both bond and stock markets.

This week's Macroeconomic article, therefore, will also be dedicated to commenting more on: the US labor situation and the financial markets' reaction last week.

Through that, Viet Hustler will also highlight the truly more concerning issues in the labor market – compared to the +142,000 payrolls number lower than expectations in the headlines of major newspapers.