Under the surface, the US labour market is showing signs of weakness

Can the Fed cut rates as long as the monthly increase in payrolls is well over 200,000? History suggests not. However, in her day, Janet Yellen once said that a better barometer of the labour market was the unemployment rate. Today, unemployment is still low, but it is tending to rise in a growing number of sectors, metropolitan areas, states and age groups. We have constructed a diffusion indicator for unemployment which points to a level typical of a downturn in the business cy...