The Weekend Edition is pulled from the daily Stansberry Digest.
Paying Santa Claus' bill is harder this year...
And not just because of higher prices for gifts...
You may have noticed fewer part-time job openings leading into this holiday season, either on storefront doors or online job sites. It's not just you. For hundreds of thousands of Americans who seek part-time holiday work, there's just not as much opportunity this year.
According to workforce consultancy firm Challenger, Gray & Christmas, American retailers have so far announced 573,000 seasonal positions... the worst showing since 2013. This is only a modest decline from where things stood at this time last year, but it's a far cry from the nearly 1 million people retailers were seeking by November 2021, more than 800,000 in 2019 and 2020, and more than 700,000 in 2018.
Social networking and business website LinkedIn recently reported a 50% drop in seasonal-job postings on its site compared with the same July-through-October period last year...
And job search engine Indeed recently reported a 6% drop in posts for seasonal jobs nationwide compared with 2022, but a 19% increase in people looking for those jobs.
Add it all up, and these are signs of a slowdown...
Go figure... Pandemic stimulus programs have finally run out, and everything is a lot more expensive than it was just two or three years ago. Plenty of people want to work so they can spend more money this holiday season, or simply have more income in general. But now it's looking harder to find a seasonal job because businesses don't want to hire as much.
Perhaps retailers can't afford the cost of more employees. Or maybe they're simply gun-shy about adding more expenses given economic uncertainty, the state of the U.S. consumer, or some combination of the two.
Whatever the reasons may be, retailers this year don't seem to need as many seasonal workers to keep up with the demands of Santa Claus and his elves.
We've gone from businesses not being able to find people to work to not wanting people to work. Take note. Something has to give. Most likely, look out for people spending less money.
Though also note the context...
The economy is still coming off the stimulus highs of 2020 and 2021. And those were not normal times.
For instance, the National Retail Federation expects holiday retail spending to grow at its pre-pandemic clip of 3% per year – and to hit a new record total. But it also notes that seasonal hires should still be down 40% from their 2021 highs.
More and more, we can say again: What happened in the financial world during the pandemic – notably the 40-year-high inflation that ensued – was a heck of a thing... particularly if by "heck of a thing," you mean "distorting and devaluing the worth of a dollar."
For now, we've reached status quo on inflation. But maybe not jobs...
The current chapter of the post-pandemic story includes a pace of inflation that continues to ease from a peak in 2022 as the Federal Reserve's rate hikes have their desired effect. But indicators also suggest the higher-rate environment has begun to weaken the strong job market of the past few years, too.
On Thursday, the government reported an uptick in "continuing jobless claims" – which represents the number of people receiving unemployment benefits (after being laid off). This number rose to 1.93 million in the week that ended November 18.
That's the highest level since late 2021. And it was higher than all the mainstream economist estimates for the week.
As for the trend, after falling in the middle of this year, the number of jobless claims has trended higher since September – up by nearly 270,000 since early September. Take a look...
Meanwhile, though, the stock market is still in a long-term uptrend. Enough investors today expect the Fed to maintain its rate-hiking pause as "official" inflation numbers continue to ease.
On Thursday, the latest widely followed inflation gauge that the Fed prefers – the personal consumption expenditures ("PCE") index – continued to show disinflation... and Americans spending more money than the month before.
Headline PCE showed a 3% year-over-year gain in October, after three straight months at 3.4%. Core PCE – excluding food and energy – rose 0.2% for the month (about "normal" to hit the Fed's 2% annual target). And the data showed consumer spending up 0.2% for the month, too.
As we've said before, though, continued "bad news" for the economy – particularly the American consumer and the job market – will eventually turn to "bad news" for the markets in general...
If so, the market will likely feel the effects before the Fed can step in with rate cuts.
And if declining part-time holiday hiring is a sign of trouble for the overall U.S. unemployment rate, that could be a catalyst for the "bad news" to spread to the markets.
We're still tracking broad changes in unemployment, too...
We've talked about the "Sahm rule" a few times here this year. It's a measure of the change in the unemployment rate. And it's an extremely reliable recession indicator.
This measure is named for Claudia Sahm, an economist and one-time employee at the Federal Reserve. Basically, the rule says that whenever the government's unemployment rate rises 0.5 percentage points off a cycle low, we're in a recession.
Notably, the institution responsible for officially "calling" recessions – the National Bureau of Economic Research ("NBER") – tends to lag. So if you want to get ahead of its announcement (which might come too late to make a difference for your portfolio, if it ever happens at all), this is one good way to do it.
As my friend Jeff Havenstein, an analyst on Dr. David "Doc" Eifrig's research team, wrote in Doc's free Health & Wealth Bulletin this week...
Specifically, the Sahm Rule takes the three-month average of the unemployment rate. Then, it compares that number with the lowest three-month average over the past year. Once the latest three-month average is 0.5 percentage points above the lowest three-month reading of the past year, that marks the start of a new recession.
Like I mentioned earlier, the Sahm Rule has a perfect record of predicting recessions over the past 50 years – although it did produce some false signals before 1970. But you'll see over the past three decades, the indicator has been very accurate in predicting recessions...
The indicator is currently sitting at 0.33. That means the unemployment rate has risen 0.33 percentage points from its recent low.
The good news... it's not flashing recession just yet. Again, it needs to hit 0.5 to signal recession.
Since October's unemployment rate checked in at 3.9% and the low for the past year was 3.4% (twice, in January and April), the headline unemployment rate is already 0.5 percentage points higher than its one-year low.
But as Jeff mentioned, the Sahm rule indicator measures the difference between the current three-month average of the unemployment rate (3.83%) and the three-month average of the bottom in the previous 12 months (which is 3.5% from December 2022 to February 2023, and then again from March to May). Hence the 0.33 reading: 3.83 minus 3.5.
How close are we to this recession warning?
Well, with 3.8% unemployment in September and 3.9% in October, there are a couple scenarios that could trigger this indicator...
First, unemployment could hit 4.2% in November – to make a three-month average of 4% for a 0.5-percentage-point gain. Alternatively, the unemployment rate could gradually tick higher to average 4% over the next several months, which seems entirely possible.
This isn't the only indicator I'm tracking. But this suggests a possible big turning point... or at least ramped-up volatility early next year.
So, what to do about all this?...
Right now, Joel Litman – founder of our corporate affiliate Altimetry – says he hasn't felt this nervous about the markets since 2008. Back then, he was waiting for the "other shoe to drop" based on the indicators he was seeing.
Then, more than one shoe dropped... in the form of the great financial crisis.
Joel also called the recession and market crash in 2020... and issued a string of 16 recommendations that went on to double or more.
His track record isn't surprising. Joel is a forensic accountant who has lectured at the Harvard and Wharton business schools and is a regular consultant for the FBI and Pentagon. Today, he says he sees trouble ahead once again... this time in 2024.
Maybe you're "really nervous," like famed investor Stanley Druckenmiller – and betting on short-term fixed-income plays to see you through. Or, maybe you're sitting on record-high levels of cash, like Warren Buffett.
But to make it through the next crisis and the "brutal months to come," Joel says it's wisest to take a different, tactical approach...
For instance, at Altimetry, instead of using traditional Wall Street analyses, Joel and his team use "Uniform Accounting" to analyze companies' financial statements – making dozens of adjustments to get around the common pitfalls of traditional accounting. This way, they can uncover a company's true earnings and financial health.
This can help find mispriced companies poised for massive growth... And it can help you avoid owning shares of businesses that are perhaps overvalued, and whose warts may show in the next crisis.
So what exactly do you buy – and when exactly do you buy it – for the best possible returns when the future of the U.S. economy is so uncertain?
Next week, on Wednesday, December 6, Joel is going public with a new, free video... where he'll explain why he's not suggesting you follow the investing pros' crisis strategies today – and what his plan is instead. You can sign up to watch it right here.
Editor's note: Joel has a history of incredible market calls. Again, he predicted the 2020 crash... And now, he's releasing a new urgent stock prediction. On Wednesday, he'll step forward with Chaikin Analytics founder Marc Chaikin to discuss a devastating market shift that's underway... and to share a rare investment that could 5x your money in the aftermath. Don't get blindsided by this event. Learn how to prepare right here.