September’s jobs report contained a sign that investors should be on alert for a U.S. recession, judging by bond guru Jeff Gundlach’s favorite warning signs.
During a panel discussion at the New York Historical Society back in May, the Doubleline Capital LP chief executive officer revealed that one of his top three recession indicators was when the unemployment rate breaches its 12-month moving average.
September’s non-farm payrolls report showed that the unemployment rate in the U.S. ticked up to 5 percent, while the 12-month moving average held steady at 4.9 percent:
Over the past year, the trend in the unemployment rate has flipped from improving to deteriorating.
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“This indicator is a necessary, but not sufficient, sign of a coming recession,” wrote Gundlach in an email to Bloomberg. “It is worth factoring into economic analysis but not a reason for sudden alarm.”