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<ul class="summary-list"><li>Expect a re-acceleration of inflation for the rest of 2024 into 2025, says Michael Landsberg.</li><li>High shipping rates and daily living expenses indicate that inflation could be worse than expected.</li></ul>A few months ago, it seemed like the war on <a target="_blank" href="https://www.businessinsider.com/higher-long-term-inflation-outlook-investing-strategy-attractive-bonds-stocks-2024-10">inflation</a> had been won.Wall Street strategists were expecting inflation to continue cooling down into 2025, clearing the way for a series of consistent rate cuts as the Federal Reserve insisted price increases were no longer a threat. In September, the Consumer Price Index (CPI) showed that prices rose 2.4% from last year — closing in on the Federal Reserve's target of 2%.Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management, wasn't so sure. He saw signs in the market pointing to a re-acceleration of inflation in the last few months of 2024 and into 2025.Now, it seems like Landsberg may be right. After a Trump victory, concerns about inflation are creeping up again as proposed policies such as <a target="_blank" href="https://www.businessinsider.com/trump-tariffs-hit-company-stock-profits-hardest-china-investing-manufacturing-2024-11">tariffs</a> could push prices up. And as the October CPI report showed, inflation is back on the rise, with prices increasing 2.6% year-over-year. In an interview with Business Insider, Landsberg shared the economic indicators he's watching to monitor inflation and the best way to prepare your portfolio in case of another flare up.<h2 id="7dc40d47-f3ee-4de6-bd68-d838e6c9299f">'Higher for longer'</h2>Inflation could rise to 3% as early as January and hit a mid-3% level in 2025, making it difficult for the Federal Reserve to continue its rate-cutting cycle, in Landsburg's view. He's expecting the Fed to pause rate cuts in December.Landsberg believes the Bureau of Labor Statistics' metrics aren't providing the full inflation picture. He's keeping his eye out on other economic indicators that provide a more on-the-ground look at inflation levels.First, rising Chinese shipping rates are a telling sign of inflation. China is one of the US' biggest trading partners, so an increase in transportation costs between the two countries will likely trickle down and reflect in consumer prices.Geopolitical conflicts in the Red Sea are contributing to the price increases, as shipping companies are forced to detour and choose longer and more expensive routes, according to Landsberg.With <a target="_blank" href="https://www.businessinsider.com/inflation-fed-rate-cuts-red-sea-attacks-panama-canal-shipping-2024-1">12% of global trade</a> passing through the Suez Canal, the Red Sea region is a critical trade route for consumer basics such as oil, cars, raw materials, and electronic components. As a result, these blockades are putting pressure on global supply chains and shipping costs.<div type="image" title="Shanghai Containerized Freight Index" height="663" width="1185" msid="115308890" hostid="261" sizebytes="33696"></div>The Shanghai Containerized Freight Index, which tracks the current spot freight rates for containerized cargo departing from Shanghai, China, has remained elevated in 2024 after spiking earlier this year due to the continued blockade of the Red Sea by Houthi rebels."Shipping costs don't affect margins of companies as much as they're going to affect people's wallets, and that's not getting looked at," Landsberg said.Landsberg also points to the high prices of commodities and everyday necessities. Food prices and rents are still rising. In some East Coast metro areas, rents have risen over double digits since last year, according to <a target="_blank" class="" href="https://www.redfin.com/news/rental-tracker-october-2024/">Redfin</a>.Insurance prices are another strong indicator of inflation, whether it be for cars or <a target="_blank" href="https://www.businessinsider.com/states-most-at-risk-climate-change-rising-home-insurance-premiums-2024-10">homes</a>."Inflation in insurance, which everyone has to have all the time, is up double digits year-over-year," Landsberg said. "That affects people's wallets certainly more than just a printed CPI number."That's not to mention the potential of wage inflation. According to October's employment report, hourly wage growth was up 4% from this time last year. If Trump clamps down on immigration, then that number could go even higher as the supply of workers falls, pushing up the cost of labor.<h2 id="102f3015-2817-4d7e-8b5c-6ea2e030d247">Rebalance your portfolio</h2>Diversification is key in an inflationary environment by spreading out risk between sectors and asset classes, but you might be less diversified that you think, according to Landsberg.One mistake that Landsberg sees investors making is doubling down too much on a specific investment theme. Investors bullish on AI may have devised creative ways to play the AI trade outside of the technology sector, such as buying data center real estate investment trusts and utility stocks. This can give them a false sense of security in their portfolio, as it seems like they're exposed to multiple different sectors.However, if all of your investments across sectors are based on the AI theme, you won't experience much derisking.Landsberg points to the market selloff in August this year, where utilities and real estate indices fared better than technology, but individual real estate and utilities stocks with significant exposure to data centers didn't perform so well."I tell people now that we need to be diversified on themes, not just on sectors," Landsberg said. Some other secular growth themes that Landsberg believes will drive stocks include an aging population, cybersecurity, and alternative energy.In addition to making sure you're sufficiently diversified, there are some other steps that you can take to protect your portfolio from inflation. Landsberg identified a few inflation-benefitting trades such as energy, financials, and <a target="_blank" href="https://www.businessinsider.com/how-to-invest-in-gold-price-record-highs-safe-haven-2024-10">gold</a>.Some funds that provide exposure to these sectors include the Energy Select Sector SPDR Fund (<a target="_blank" href="https://markets.businessinsider.com/etfs/the-energy-select-sector-spdr-fund-us81369y5069?miRedirects=1">XLE</a>), the iShares US Financials ETF (<a target="_blank" href="https://markets.businessinsider.com/etfs/ishares-us-financials-etf-us4642877884?miRedirects=1">IYF</a>), and the Goldman Sachs Physical Gold ETF (<a target="_blank" href="https://markets.businessinsider.com/etfs/goldman-sachs-physical-gold-etf-us38150k1034?miRedirects=1">AAAU</a>)As the end of the year draws near, Landsberg recommends taking a look at your portfolio and rebalancing some positions. If you're overexposed to technology and AI, now is a good time to put money in more inflation-resistant areas.Ultimately, make sure you're investing in high-quality companies with a robust financial profile, he said."You need to have a portion of your portfolio that will do well if inflation starts to move back higher," Landsberg said. "You want companies with pricing power, companies with earnings growth."

Here's how to rebalance your portfolio as these economic indicators flash 'higher for longer' inflation and rates

Champagne index to men’s underwear index: Most peculiar economic indicators

<ul class="summary-list"><li>Europe could take a hit to GDP in a second Trump presidency, Goldman Sachs analysts say.</li><li>They point to increased uncertainty as the scope of the timing of Trump's sweeping tariffs remains unclear.</li></ul>As the world takes in the results of the US presidential election, regions around the world are determining what a Trump presidency might mean for their economies.Europe could face a big hit to economic growth as trade tensions increase, Goldman Sachs analysts said. The analysts downgraded their growth forecasts across the region, down to 0.8% from their previous forecast of 1.1% for 2025. In 2026, the analysts said they expect growth of 1%, down from 1.1% and lower than the consensus estimate of versus 1.4%. Overall, the analysts expect the Euro area to take a 0.5% hit to real GDP, with the bulk of the downturn set to materialize next year.The analysts point to renewed trade tensions fueled by Trump's proposal for sweeping tariffs on all US imports.More significant than the actual tariff increases, though, will be the trade policy uncertainty that comes with them, the analysts say. That uncertainty will pose a bigger hit to growth than the tariffs themselves, they said. "The actual magnitude of tariff increases might matter less than the uncertainty created by threatening to impose tariffs on Europe," the analysts said in a Wednesday note, adding, "The magnitude of the tariff increase, however, is unlikely to be clear for some time, and so we expect a pronounced further increase in TPU in the baseline scenario."The firm's trade policy uncertainty indicator for Europe has already risen in recent weeks as markets increasingly priced in odds of a Trump win.The analysts acknowledged, though, that while Trump's 10% across-the-board tariff is a clear risk, they expect his administration to initiate a more moderate set of duties on European countries.Those tariffs will likely target auto exports, which are worth $80 billion, or 0.9% of EU exports, the analysts said. The duties will have large impacts to GDP in Germany, Sweden, and Switzerland in particular, they added. During his campaign, Trump proposed raising tariffs on imports from all countries to <a target="_blank" class="" href="https://www.businessinsider.com/trump-tariff-plan-inflation-policy-impact-trade-war-china-rates-2024-5">at least 10%</a>, and said imports from China would be <a target="_blank" rel="" class="" href="https://www.businessinsider.com/donald-trump-impose-tariffs-china-if-elected-2024-2?utm_medium=ingest&amp;utm_source=markets">subject to even steeper 60% duties</a>.The analysts add that a Trump presidency will prompt European countries to up their defense spending to account for a <a target="_blank" href="https://www.businessinsider.com/how-trump-could-handle-ukraine-war-if-reelected-scenarios-2024-10">potential decrease</a> in US military support to Ukraine. That wartime support will cost the EU another 0.5% of GDP every year, the analysts say.The increased spending won't result in a growth boost, either, they say."Any resulting growth boost, however, will likely be limited by modest military spending multipliers in Europe, upward pressure on long-term yields from higher deficits and negative confidence effects from elevated geo-political risk," the analysts said.European officials have long warned of huge growth impacts from a second Trump presidency.Last month, ECB member Joachim Nagel <a target="_blank" href="https://www.businessinsider.com/trump-win-economic-growth-inflation-risks-europe-ecb-germany-2024-10">warned</a> a Trump win could hammer growth and send inflation soaring in Europe, and back in January, ECB president Christine Lagarde said a Trump win is "clearly a threat" to Europe, pointing to his tariff plans, commitment to NATO, and climate change policies.

Trump's presidency will hurt Europe's economic growth amid renewed trade tensions, Goldman Sachs says

<ul class="summary-list"><li>China's stock markets slumped after a 10-day rally that was driven by Beijing's stimulus announcement in September.</li><li>Investors were disappointed when a hyped-up Chinese government press briefing failed to deliver more stimulus.</li></ul>China's top leadership has a problem with its economic stimulus: its own investors at home saw right through the hype this week.China's domestic stock markets slumped on Wednesday after a 10-day blitz culminated in a two-year high.The mainland's benchmark CSI 300 Index closed 7.1% lower, while leading indices in Shanghai and Shenzhen ended the day 6.6% and 8.7% lower.China's domestic stock markets are dominated by over 200 million mom-and-pop retail investors, who account for about <a target="_blank" href="https://www.troweprice.com/financial-intermediary/sg/en/thinking/articles/2024/q2/chinas-economy-enters-a-new-cycle-unveiling-fresh-opportunities-apac.html">70% of the trading volume.</a> so market movements reflect ground sentiment.The markets were boosted in late September after a stimulus announcement by the People's Bank of China. The CSI 300 index closed nearly 20% higher year-to-date before weeklong National Day public holidays. The markets reopened on Tuesday and ended higher, though that morning's immediate bump cooled off during the trading day.The rally fizzled because China's National Development and Reform Commission, the country's top economic planner, lined up a highly anticipated press conference on the first working day after weeklong public holidays. But the commission did not introduce more stimulus measures, which dragged market sentiment.<h2 id="24dd9538-5d55-451b-902a-d6d1deb152fc">China watchers are more optimistic</h2>It looks like China's investors are less optimistic than market watchers elsewhere. Those abroad are expressing more confidence in the world's second-largest economy and seeing the bright side in this week's losses.Since the commission is actually responsible for implementation rather than funding initiatives, most analysts weren't expecting much stimulus in the first place.Some professionals even view this week's stock losses positively. Hong Kong's Hang Seng Index — dominated by institutional investors — ended the day down 1.4%, extending Tuesday's 9.5% slump. The index is 9.3% lower so far this week."We believe a pullback following a 36% rally in less than a month may be healthy in allowing market participants to reassess recent policy developments, while providing entry points for new investors and creating more balanced market participation," wrote Yeap Jun Rong, a market strategist at trading platform IG, in a Wednesday note about the Hong Kong market.Instead of harping on market jitters, economists are now pointing to Beijing's political commitment to improving the economy."To be sure, there may still be an expectations gap as announcements fall short of loftier expectations. But that's not as damaging as market misgivings about Beijing getting stimulus cold feet," Vishnu Varathan, Mizuho's macro research head for Asia excluding Japan, wrote in a note on Wednesday.After the initial stimulus announcement on September 24, China's top leaders swiftly pledged support for the economy, including in the beleaguered property market.According to Xinhua state news agency, <a target="_blank" href="https://www.chinadaily.com.cn/a/202410/08/WS6705253aa310f1265a1c6860.html">Chinese Premier Li Qiang</a> called on the country to implement economic stabilization measures on Tuesday."There is a case to be made that Beijing's initial pronouncements of boosting the equity market, supporting housing unequivocally are sound commitments," wrote Varathan. He said that China is already in the midst of a hard landing — and Beijing knows it."And so, Beijing is now fully invested in efforts to extricate the economy holistically," he wrote.Economists are waiting for more meaningful support measures."We expect a fiscal package to be announced in coming weeks, including demand-boosting stimulus on consumption and investment, as well as further enhancement of social security, healthcare, and birth encouragement," wrote Hele Qiao, the Greater China chief economist and head of Asia economics research at BofA Global Research, on Tuesday.Qiao expects an announcement after the next meeting of China's top legislature, which typically takes place any time from mid-October to early November. The exact date will only be announced a week or two before the meeting.

The markets saw right through China's latest economic support hype

<ul class="summary-list"><li>Recessions are notoriously difficult to predict.</li><li>But unemployment rates and inverted yield curves aren't the only way to watch for a recession.</li></ul>Financial hand-ringing abounds these days as money managers and consumers alike eye <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/investing/are-we-in-a-recession">a potential recession.</a>But recessions are notoriously <a target="_blank" class="" href="https://www.philadelphiafed.org/-/media/frbp/assets/economy/articles/economic-insights/2019/q1/eiq119-predicting-recessions.pdf">difficult for economists to predict</a>.Official recession indicators are mounting. Two recession indicators — the <a target="_blank" class="" href="https://www.businessinsider.com/recession-indicator-economy-inverted-yield-curve-campbell-harvey-fed-unemployment-2024-6">inverted yield curve</a> and <a target="_blank" class="" href="https://www.businessinsider.com/sahm-rule-recession-outlook-indicator-triggered-unemployment-rate-jobs-report-2024-8">the SAHM Rule</a> — are flashing red. But earlier this year, financial bigwigs admitted that they got their <a target="_blank" class="" href="https://www.businessinsider.com/jamie-dimon-ray-dalio-us-economy-recession-predictions-wrong-wsj-2024-3">previous predictions wrong</a> — for now.But for the less market-inclined money watcher, there are several simpler, stranger signs that could also point to a coming downturn.Business Insider spoke to financial experts about the weird — and often imperfect — recession indicators they keep an eye out for in times of trouble."Few if any of these informal indicators are conclusive on their own, and some may simply signal changes in consumption patterns," said Peter C. Earle, senior economist at the American Institute for Economic Research. "The confluence of many at once, however, can be indicative of a souring macroeconomic trend."<h2 id="388d0245-492c-45e1-a60d-546f9ed4cb93">Lipstick sales</h2><a target="_blank" href="https://www.businessinsider.com/lipstick-index-explained-how-makeup-sales-could-forecast-recession-2022-8#:~:text=Back%20in%202001%2C%20when%20the,worse%2C%20lipstick%20sales%20got%20better.">The Lipstick Effect</a> is one of the more well-known wacky recession indicators. The rule equates an increase in lipstick sales to a downturn in people's purchasing power, a sign that often points to a recession ahead, Aaliyah Kissick, CEO of Financial Literacy Diaries and a Gen Z money expert, told BI.Lipstick most often stands in as the titular item in the economic theory, but the rule effectively operates as an example of the substitution effect, positing that as <a target="_blank" class="" href="https://www.businessinsider.com/recession-outlook-us-economy-consumer-spending-hard-landing-inflation-slowdown-2024-6">people lose the ability to buy</a> themselves big-ticket luxury items during difficult financial times, they turn toward smaller, more affordable luxury because it represents a "small win," Kissick said.Along with an uptick in lipstick sales, a sales increase in similarly small items like nail polish could also point to financial troubles, Joe Camberato, CEO of NationalBusinessCapital.com, told BI.The theory has <a target="_blank" class="" href="https://www.businessinsider.com/beauty-shoppers-still-spending-big-as-us-consumers-cut-elsewhere-2023-3">played out</a> several times throughout history, including ahead of the 2008 recession.<h2 id="9b3867ce-4d1e-4e2b-8fdd-cc1f5c08a572">Strippers' tips</h2>Exotic dancers are often among the first group of people to warn of a coming recession, Kissick said, lending credence to another predictive theory: <a target="_blank" class="" href="https://theface.com/society/strippers-recession-stripping-adult-industry-porn-politics-economy">The Stripper Index.</a>Kissick pointed to strippers' tips as a microcosm for elastic goods. The elasticity of a product refers to how changing prices may or may not trigger changing demand.Coffee, for example, is an inelastic good. Even as <a target="_blank" class="" href="https://www.businessinsider.com/coffee-prices-increases-inflation-drought-frost-2022-8">prices rise</a>, people continue to buy it because they just aren't willing to go without it. The fact that caffeine is an addictive substance means people won't change their demand for coffee even in tough economic times.But where a typical white-collar worker isn't willing to forgo coffee during a recession, he may be more likely to ditch the after-hours entertainment, or he'll tip his performers less, Kissick said.The theory can more broadly be applied to any service industry that operates with a tipping culture, Earle said."As a lot of people in the food service industry have noticed lately, a decrease in restaurant tipping suggests that consumers are reducing discretionary spending — whether because of rising unemployment, the debilitating effect of inflation, or both," he added.<div type="image" title="A stripper pole with a crumpled-up dollar bill as a tip." height="1272" width="2357" msid="112994375" hostid="261" sizebytes="67034"></div><h2 id="04bc0b6c-49ff-4d94-9497-8916eef21a65">Dating app usage</h2>When people's finances are flourishing, they often engage in romance via in-person activities, going out for dinner and drinks with potential partners who they've met out and about while spending their money, Kissick said.But when a <a target="_blank" class="" href="https://www.businessinsider.com/2008/12/recession-leads-to-surge-in-online-dating">recession looms</a>, dating apps may see a surplus of users and an uptick in activity as people increasingly rely on the internet to meet new people."<a target="_blank" class="" href="https://www.businessinsider.com/restaurants-america-eating-out-crisis-your-fault-labor-shortage-tipping-2024-2">Dining out</a> is another elastic good and one of the first things to go," Kissick said. "When we're out in public less often, we're less likely to meet our soulmate, so we turn to dating apps."The New York Times <a target="_blank" href="https://www.nytimes.com/2009/02/12/fashion/12dating.html">reported</a> in 2009 that online matchmakers were seeing a surge in interest even amid the drudge of the 2008 financial crisis.Online dating is an <a target="_blank" class="" href="https://www.businessinsider.com/rising-cost-dating-millennials-gen-z-soaring-cost-love-apps-2024-8">inexpensive way to meet people</a>, and unemployed people tend to have more time on their hands, the outlet reported at the time.<h2 id="9c0df9d3-5935-4296-a21f-20e306151c64">Business disputes</h2>Trouble in middle-market paradise may also be a recession indicator, said Michael Platner, a corporate finance attorney and strategist at Lewis Brisbois.Platner pointed to an <a target="_blank" class="" href="https://www.businessinsider.com/us-corporate-bankruptcies-fed-rate-cuts-consumer-retail-spending-fisker-2024-7">uptick in private company insolvencies</a>, partner fights, and business disputes as common recession harbingers. Difficult financial times often require business owners to take decisive action, which can reveal a partner or executive who isn't able to handle the new pressures, extra hours, or less cash, he said."In hard times, it's not uncommon for simmering partner issues to come to the top and for one partner to blame the other for not pulling their weight," he told BI.Law firms are perhaps especially primed to look for business disputes. The International Bar Association <a target="_blank" href="https://www.ibanet.org/preparing-for-a-global-economic-downturn-the-outlook-for-in-house-counsel">wrote</a> last year that "issues can arise or intensify in regard" to a company's workforce during difficult economic times.Corporate bankruptcies, meanwhile, jumped by 30% from 2022 to 2023, Reuters <a target="_blank" href="https://www.reuters.com/legal/transactional/us-business-bankruptcies-rose-30-court-stats-show-2023-10-26/">reported</a> last year.<h2 id="f18372df-c244-403e-a2c7-fcc77dac04ee">Men's underwear</h2><a target="_blank" class="" href="https://www.businessinsider.com/mens-underwear-index-economy-indicator-2014-9">The Men's Underwear Index</a> posits that a decline in men's underwear sales indicates budget-tightening on non-visible essentials, potentially pointing to a recession, Earle told BI.Made famous by former Federal Reserve Chair Alan Greenspan, the theory suggests men stop buying new underwear during difficult financial times because it's a garment most people won't actually see on a day-to-day basis.The underwear indicator is far from foolproof but has proven true in some past recessions. <a target="_blank" class="" href="https://www.businessinsider.com/recession-signs-unusual-clues-lipstick-underwear-index-2023-4">Men's underwear sales fell</a> in 2008 and 2009, Business Insider previously reported, as well as during the COVID-19 pandemic.<div type="image" title="Underwear for sale are pictured at an Abercrombie &amp; Fitch Co store in Pasadena, California March 3, 2015. Abercrombie &amp; Fitch is slated to release its fourth-quarter fiscal 2014 results on Wednesday. REUTERS/Mario Anzuoni " height="533" width="800" msid="112994384" hostid="261" sizebytes="24744"></div><h2 id="853b973d-e067-4035-83bf-381053f561c3">Pawn shop boom</h2>An increase in <a target="_blank" class="" href="https://www.businessinsider.com/personal-finance/personal-loans/what-is-a-pawn-shop-loan">pawn shop activity </a>can suggest financial strain, as the stores offer desperate people a chance to make some quick cash, Earle said.Inventory at pawn shops typically balloons during difficult times while sales dip. USA Today <a target="_blank" href="https://www.usatoday.com/story/news/politics/elections/2024/03/24/pawnshops-tell-different-economic-story-than-biden/72881561007/">reported</a> in March that pawn shops were witnessing a "glut" of inventory, indicating people don't have much cash on hand.Similarly, rising sales at dollar stores or increased activity at secondhand stores are also signs that consumers are cutting back, Earle said.Back in 1990, the Los Angeles Times <a target="_blank" class="" href="https://www.latimes.com/archives/la-xpm-1990-12-25-me-7046-story.html">reported</a> that pawnbrokers are traditionally a trustworthy recession predictor. During some historical recessions and depressions, lines have formed outside pawn shops as people seek out loans.

Lipstick sales and strippers' tips: 6 weird indicators a recession could be coming  

<ul class="summary-list"><li>Israel launched a ground offensive against Hezbollah targets in southern Lebanon on Tuesday.</li><li>Despite the Middle East's significant oil production, crude prices were little changed.</li></ul>Israel launched a <a target="_blank" class="" href="https://www.businessinsider.com/israel-launches-ground-offensive-into-lebanon-destroy-hezbollah-targets-2024-9">ground offensive</a> against Hezbollah targets in southern Lebanon on Tuesday in a marked escalation of tensions in the Middle East — and the energy markets largely shrugged.The indifference is significant because the Middle East is a huge producer of crude oil — pumping one-third of the world's supply — so any geopolitical tension in the region could spark some sort of meaningful price gain.This time, oil prices simply nudged up a little.Global benchmark <a target="_blank" class="" href="https://markets.businessinsider.com/commodities/oil-price">Brent crude oil</a> futures were up 0.17% to $71.82 per barrel at 2.14 a.m. ET. Benchmark US <a target="_blank" class="" href="https://markets.businessinsider.com/commodities/oil-price?type=wt">West Texas Intermediate</a> futures were 0.19% higher, at $68.32 per barrel.Notably, the gains followed a 17% decline in Brent and a 16% drop in US WTI futures over the third quarter of the year, when traders were on edge for upside price action amid the developments in the Middle East.The reason isn't rocket science. It's mostly China — the world's largest importer of crude oil."The main cause for the bearish sentiment has been a steady slowing of crude demand growth, especially in China," wrote Henning Gloystein, the practice head of energy, climate, and resources at the Eurasia Group, last month.The world's second-largest economy has been struggling to stage a convincing recovery post-pandemic and is battling multiple challenges, including a property crisis, high youth unemployment, and deflation.Beijing pulled out an <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-aggressive-monetary-stimulus-interest-rate-rrr-2024-9">economic stimulus package</a> last week that massively boosted sentiment in China's previously downbeat stock markets, but most analysts are saying the measures are just not enough to turn the situation around on the ground.Even Chinese leader Xi Jinping <a target="_blank" class="" href="https://www.businessinsider.com/xi-jinping-painful-road-ahead-rainy-days-new-stimulus-china-2024-10">acknowledged</a> the extent of China's problems in the country's National Day speech on Monday, saying the path forward wouldn't be smooth.BMI, a research firm, wrote last week that short positions in Brent outnumbered longs for the first time earlier in September."Sentiment in the market is already weak, with a bearish macro narrative weighing heavily to the downside, and investors are currently far more responsive to bearish price drivers than to bullish ones," wrote BMI's analysts.The sentiment over China has been so poor that <a target="_blank" class="" href="https://markets.businessinsider.com/news/commodities/saudi-arabia-oil-prices-brent-crude-outlook-opec-production-cuts-2024-9">Saudi Arabia</a> has pretty much thrown in the towel on pushing oil higher.The kingdom — which is the world's largest crude exporter and OPEC's de facto leader — is giving up its $100 per barrel price target and ready to increase oil output, the <a target="_blank" class="" href="https://www.ft.com/content/1d186f62-5941-4f9e-aef1-7d93a8a696cd">Financial Times</a> reported last week.This means that Saudi Arabia is looking to corner a larger market share instead of targeting higher profit margins by restricting output.This would be a big shift in policy, since Saudi Arabia has been leading OPEC and the group's allies, including Russia, in maintaining oil supply cuts since late 2022.Despite the downside pressure on oil prices, things could change quickly if geopolitical uncertainty rises further in the Middle East.The US may also provide some support to the market as crude oil inventories hit a <a target="_blank" class="" href="https://www.reuters.com/business/energy/us-crude-gasoline-distillate-inventories-fall-eia-says-2024-09-25/">two-and-a-half year low</a> as of September 20, the latest data available."Yes, it is true that traders are worried about the fact that Chinese demand for oil is not back yet to a level that can make the OPEC stop extending the supply cut process," wrote Naeem Aslam, the CIO at London-based Zaye Capital Markets."However, the fact that the US oil stockpiles are clearing more quickly indicates that the demand for oil in the world's largest economy is trending in the right direction, which is positive for price action," Aslam added.

China's economic issues are so serious that even the oil market doesn't care about Middle East tensions — for now

<ul class="summary-list"><li>The Perkins Rule suggests a recession is imminent when monthly payrolls decline.</li><li>Unlike other indicators, the Perkins Rule focuses solely on negative monthly payroll reports.</li></ul>Countless recession indicators have flashed over the past few years, from an inverted yield curve to <a target="_blank" class="" href="https://www.businessinsider.com/sahm-rule-recession-outlook-indicator-triggered-unemployment-rate-jobs-report-2024-8">the Sahm Rule,</a> and yet the economy continues to grow in defiance of the signals.However, there is a more straightforward recession indicator that investors should pay attention to, and it could be a more timely indicator of when an economic downturn may occur.GlobalData TS Lombard managing director Dario Perkins coined the "Perkins Rule" in a series of notes over the past month.The recession indicator triggers when the jobs market contracts.That means instead of using a three-month moving average of unemployment or looking at signals in the bond market, the Perkins Rule is activated simply when a negative monthly payroll report is received."The Perkins rule asks whether payrolls are declining. Not rocket science," Perkins said in a note on Monday.And so far, with the US economy consistently adding well over 100,000 new jobs per month, there have yet to be any signs of a negative monthly payroll report, suggesting the economy is likely to continue to grow."True uncertainty is where we cannot assign probabilities, because the world is behaving in a way we haven't seen before. I think this applies to the current recession debate," Perkins said in a note this month.He added: "You have to keep an open mind, and not assume the economy will follow classic cyclical patterns. Leading indicators, yield inversion, perhaps even the Sahm rule, none of these rules seem reliable."The Perkins Rule doesn't suffer from the potential flaw of the unemployment-based Sahm Rule, which experts say is being distorted because a rise in labor supply has driven the unemployment rate higher over the past year, rather than a decline in labor demand."If the unemployment rate is rising because the labour force is growing quickly, it is not clear that this can set off the true recessionary dynamic - because it is not such an obvious source of reflexivity," Perkins explained.The Perkins Rule hits on the "reflexivity" of employers and the Federal Reserve, as a negative jobs report could quickly send shockwaves across the labor market and ultimately cascade into a painful economic downturn."People lose their jobs (or they become fearful of losing their jobs), spending goes down, which reduces corporate revenues, which leads to further rounds of redundancies. You can see why even small employment cuts lead to bigger ones," Perkins said.But that's not happening right now.Even when accounting for the <a target="_blank" class="" href="https://markets.businessinsider.com/news/stocks/economy-added-818000-fewer-jobs-ed-yardeni-says-dont-worry-2024-8">BLS' major downward revision in job gains</a> from April 2023 through March 2024 of 818,000, the US economy is still adding an average of about 175,000 new jobs each month.Compared to the Sahm Rule, the Perkins Rule has had more false positives, Perkins admitted."While it is rare for US payrolls to decline outside of recessions, it does happen occasionally," Perkins said. "Usually this is due to obvious distortions, such as extreme weather events."The Perkins Rule flashed a false signal during the 1995 soft landing, and in the late 1960s."So the Perkins rule isn't fool proof. But that's not the point. The important thing is that when you look at every time the Sahm rule has triggered since WW2, there were only three occasions where payrolls weren't ALREADY negative," Perkins said.He added: "Usually when the Sahm rule triggers, the Perkins rule has already triggered. That matters because this is NOT what is happening today. The latest triggering of the Sahm rule looks very different to the average recessionary experience."Investors will get to see if the Perkins Rule triggers next week when the August jobs report is released on September 6. Economists expect the report to show 114,000 jobs were added to the economy in August.

The Sahm Rule has flashed, but there's a simpler recession indicator investors should be watching

<ul class="summary-list"><li>China may be delaying economic stimulus ahead of the US election, economist Rory Green says.</li><li>Beijing is cautious due to potential Trump tariffs, which could impact growth in 2025.</li></ul>China may be holding back on economic stimulus ahead of the US presidential election, an economist wrote on Thursday.This is because Beijing is keeping its powder dry in case Republican candidate Donald Trump wins in the November polls, wrote Rory Green, the chief China economist at GlobalData.TS Lombard.<a target="_blank" class="" href="https://www.businessinsider.com/donald-trump-impose-tariffs-china-if-elected-2024-2">Trump</a> said in February he would slap tariffs of over 60% on China if he wins the election."The chance of a Trump victory and 60% tariffs on all Chinese exports to the US puts the onus on Beijing to hold back on stimulus in case it needs to drive growth in 2025," Green wrote.Trump's proposed tariffs could hit China hard. Its economy is getting a boost from <a target="_blank" class="" href="https://www.businessinsider.com/china-exports-imports-trade-overcapacity-demand-prices-overseas-sales-2024-9">robust export sales</a> because <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-weak-domestic-demand-factory-activity-amid-strong-export-2024-7">domestic demand is poor.</a>The Chinese economy has been struggling to recover following pandemic lockdowns as it confronts numerous issues, including an epic property crisis, high youth unemployment, and geopolitical tensions."Amid constrained domestic demand, higher tariffs on sales to the US and greater scrutiny of transshipment of goods would pose a significant growth, financial and social-stability risk," wrote Green.Green estimates that a 60% tariff rate on all Chinese exports to the US would shave 1 to 2 percentage points from China's GDP growth next year.The <a target="_blank" class="" href="https://www.imf.org/en/Publications/WEO/Issues/2024/07/16/world-economic-outlook-update-july-2024">International Monetary Fund</a> projects China's GDP to grow 4.5% next year. Beijing typically announces its own growth target in the early months of each year.<h2 id="b715dc7f-dbf8-4226-bd75-776a2db8e7d4">High pain threshold</h2>During his first term in office, Trump took issue with the US's large trade deficit with China and hiked tariffs on a range of Chinese imports.According to the US Commerce Department, the US still has a trade deficit with China, which hit $27.2 billion in July<a target="_blank" class="" href="https://www.bea.gov/news/2024/us-international-trade-goods-and-services-july-2024">.</a>Ahead of the US election, Xi still has some time to take stock of China's economy and its next steps.To be sure, China has released some support measures for its economy, but they don't appear to be doing enough. They include sales of <a target="_blank" rel=" nofollow" href="https://english.www.gov.cn/news/202405/15/content_WS6644061cc6d0868f4e8e719d.html">ultra-long special sovereign bonds</a> to fund infrastructure spending and plans for local governments to buy up unsold commercial housing.But Xi's "pain threshold is high," so there may still be some time to go before his administration takes decisive steps to intervene in the market, wrote Green.Even though leading indicators for GDP growth are poor, Green's assessment is that the situation isn't that serious yet. This is because three important pressure points — China hitting its GDP growth target of <a target="_blank" class="" href="https://www.businessinsider.com/china-economy-two-sessions-growth-goal-challenging-economists-2024-3#">around 5% this year,</a> social stability, and financial fragility — are "showing stress but not yet flashing red.""For things to get better, they will have to get worse first," wrote Green, who added that the market may not see any significant demand-side stimulus until the first half of next year.Green wrote that should Trump win the US presidential election and impose higher tariffs on Chinese shipments, Beijing is likely to respond in the short term with managed Chinese yuan depreciation, increased domestic stimulus, retaliatory tariffs on US goods, and export curbs on key products.It's likely to be a lose-lose situation on the trade front."Whatever the eventual tariff/stimulus, it will be a global stagflationary shock with China suffering the bigger growth hit and the US most of the inflation," Green wrote.

Xi may be holding back on economic stimulus because of Trump's tariff threat, an economist says

<ul class="summary-list"><li>A new indicator says there's a 40% chance the US is in a recession that started as early as March.</li><li>The measure builds on the Sahm rule, using job vacancy data in addition to unemployment data.</li></ul>There's a new recession indicator that's making waves, and it says there's a 40% probability the US is already in a recession.Economists Pascal Michaillat and Emmanuel Saez recently <a target="_blank" href="https://pascalmichaillat.org/16.pdf">released the details of a new recession indicator</a> that builds on the widely-cited Sahm ruleThe Sahm rule—named for its creator, economist Claudia Sahm—uses the difference between the three-month moving average of the unemployment rate and the past 12-month low. If the difference is at least 0.5 percentage points, the US is in a recession.The rule was triggered earlier this month when the July jobs report showed a 4.3% unemployment increase (though Sahm herself said she <a target="_blank" href="https://www.businessinsider.com/sahm-rule-recession-unemployment-federal-reserve-interest-rates-cut-2024-8">doesn't think the US is in a recession</a>).Michaillat and Saez's measure uses a similar methodology, but it's two-sided, using both unemployment and the vacancy rate for open jobs.The measure uses the Sahm rule's procedure for unemployment, and pairs it with the difference between the three-month moving average of the vacancy rate and its past 12-month maximum.When the indicator shows a difference of 0.3 percentage points, a recession may have started, and above 0.8 point, a recession definite.Using data from July, the indicator is now at 0.5 percentage points, nodding to a 40% probability of a recession that could have started as early as March, Michaillat and Saez said in a paper.The indicator works for recessions going back to 1930, while Sahm's only works back to 1960, the economists added.A new indicator could help economists and investors better understand if a downturn is imminent. Even though the July jobs report triggered the rule she pioneered, Sahm herself wasn't sure it was accurate this time around."This pandemic cycle has been different on so many dimensions and has laid waste to so many economic models and rules of them," Sahm said in an interview with Business Insider last week. "If the Sahm Rule was going to fail, it's going to be this time."She added that having such a negative effect tied to one's name is <a target="_blank" href="https://www.businessinsider.com/claudia-sahm-rule-profile-recession-indicator-unemployment-rate-interest-rates-2024-8#:~:text=Her%20model%2C%20known%20as%20the,over%20the%20previous%2012%20months.">a hefty burden</a> and that she's been waiting for a newer, more accurate rule to come along."What I am so looking forward to is someone deciding it's great to have something like this and is motivated and goes off and does it better," Sahm said.

There's a 40% chance the US economy is already in a recession, according to a new indicator

<ul><li>Five recession indicators that were flashing a warning sign about the economy have since retreated.</li><li>Ned Davis Research said its Recession Probability Model has plunged to 2%, suggesting "minimal odds" of an economic downturn.</li><li>"The reversal of these historically important indicators shows why it is risky to rely on a few indicators that support a particular view," NDR said.</li></ul>Various economic indicators that suggested a recession was imminent not too long ago have since retreated, according to Ned Davis Research.That means investors probably don't have to worry about an economic recession occurring any time soon. That's an about-face from just a few months ago when various economists and market strategists were still bracing for a recession.From the Leading Economic Indicator Index to the inverted yield curve, NDR highlighted five recessionary signals that should no longer be the cause of concern for investors."The reversal of these historically important indicators shows why it is risky to rely on a few indicators that support a particular view," NDR strategist Joseph Kalish said in a Friday note.These are the five recession indicators that are no longer flashing red as the resilient US economy continues to power forward.<h3>1. NDR's Recession Probability Model</h3>NDR's internal Recession Probability Model is derived from state employment and income data, and when it hits the 50% level, it flashes an imminent recession warning.The model surged to 43.5% in December, just shy of the 50% trigger level, but it has since plunged to just 2.1% in February thanks to several data revisions and seasonal factor updates, according to NDR.That indicates "minimal odds" of a recession at this time.<div type="image" title="RPM" height="631" width="778" msid="109255522" hostid="261"></div><h3>2. Household employment levels</h3>"The household employment survey had been much weaker than the establishment survey entering this year. Adjusting household employment to the payrolls concept saw a large gain of 352,000 in March, following three consecutive months of decline. The only times that had happened was during and immediately after the GFC and during the pandemic," Kalish said. <h3>3. Gross domestic income</h3>Measuring the US economy by income levels is less popular than the consumption-based GDP measure, but it does offer insight into how healthy US income levels are. "In theory, the two measures should be equal, since one person's spending is another person's income," Kalish explained. But those two economic measures have not been equal more recently, sending warning signs about unsustainable growth in the economy. GDP was notably stronger than GDI for four consecutive quarters, with annualized GDP above 2% while GDI had failed to hit 2% during that stretch. But that finally reversed in the fourth quarter, when GDI surged to an annual rate of 4.8%, <a href="https://www.businessinsider.com/recession-outlook-economy-gdp-fourth-quarter-of-2023-2024-1#:~:text=Real%20GDP%20grew%20at%20an,point%20suggests%20still%20strong%20growth.">far outpacing the GDP reading of 3.4%. </a><h3>4. Leading Economic Index</h3>"The Conference Board's LEI had declined for 23 consecutive months, driving its six month change and diffusion indexes into contractionary territory for the economy. In February, the LEI ticked up 0.1% and the Conference Board no longer expects a recession," Kalish said. You can read more about the <a href="https://www.businessinsider.com/recession-indicator-turns-positive-positive-signal-stock-market-lei-signal-2024-3">recent reversal in the LEI index here.</a><h3>5. Inverted yield curve</h3>An inverted yield curve, which occurs when short-term interest rates rise above long-term interest rates, has long been <a href="https://www.businessinsider.com/inverted-yield-curve-next-recession-outlook-indicator-unreliable-interest-rates-2024-3">a closely watched recession indicator</a>, but since going negative in July 2022, the yield curve recession signal has failed to materialize. NDR believes that will continue to be the case."Finally, 525 bp of Fed rate hikes and an inverted yield curve were supposed to generate a recession by now. Our two indicator composite gave a contraction signal in October 2022. Since that signal, the Coincident Economic Index has gained 2.3%," Kalish said. <div type="image" title="Yield curve" height="671" width="785" msid="109255524" hostid="261"></div>

These 5 recession indicators have escaped the danger zone after flashing economic red flags

<ul class="summary-list"><li>Americans are flocking to the South for jobs, lower taxes, and more affordable housing.</li><li>But by some economic measures, the South has some of the poorest states in the nation.</li></ul>The future of the US economy <a target="_blank" href="https://www.businessinsider.com/best-economy-us-south-texas-florida-houston-dallas-nashville-miami-2023-12">might be in the South</a> — but some states in the region are at risk of being left behind.What constitutes the Southern region of the US is <a target="_blank" href="https://www.businessinsider.com/south-states-usa-2018-5">up for debate</a>, but the Census Bureau <a target="_blank" href="https://www2.census.gov/geo/pdfs/maps-data/maps/reference/us_regdiv.pdf">defines</a> it as 16 US states — including Delaware, Maryland, Virginia, and West Virginia — plus the District of Columbia.In June, the financial services company WalletHub <a target="_blank" href="https://www.businessinsider.com/us-state-economies-ranking-best-worst-wallethub-washington-utah-massachusetts-2024-6">ranked the 50 states and DC</a> across three categories: economic activity, economic health, and innovation potential. Twenty-eight metrics, including the share of fast-growing firms, the unemployment rate, and entrepreneurial activity, were used in the analysis.Five of the 10 states with the lowest rankings were located in the South: <a target="_blank" href="https://www.businessinsider.com/mississippi-defends-abortion-ban-one-in-three-kids-in-poverty-2021-11">Mississippi</a>, West Virginia, Arkansas, Louisiana, and Kentucky.Additionally, the six states with the lowest <a target="_blank" href="https://www.businessinsider.com/us-economy-by-metro-area-ranked-san-francisco-seattle-austin-2018-4#40-cleveland-elyria-oh-1">GDP per capita</a> — the size of a state's economy, divided by the number of people living in the state — are all in the South: Mississippi, West Virginia, Arkansas, Alabama, South Carolina, and Kentucky. GDP per capita is one indicator that's used to gauge economic prosperity and living standards across the US — it's calculated using the latest state-level GDP data from the Bureau of Economic Analysis and population estimates from the Census Bureau.In some ways, the Southern economy is booming. Cities like Houston, Dallas, Miami, and Nashville could be poised to <a target="_blank" href="https://www.businessinsider.com/best-economy-us-houston-dallas-nashville-miami-cities-moving-businesses-2023-11">become economic powerhouses</a> as more companies invest there and create jobs. Additionally, warmer weather, <a target="_blank" href="https://www.businessinsider.com/save-income-tax-moving-california-florida-new-york-2022-9">lower taxes</a>, <a target="_blank" href="https://www.businessinsider.com/california-texas-moving-arizona-florida-expensive-housing-costs-washington-nevada-2023-10">cheaper housing</a>, and <a target="_blank" href="https://www.businessinsider.com/cities-hiring-the-most-florida-texas-california-job-growth-tech-2024-4">job growth</a> have persuaded many Americans to <a target="_blank" href="https://www.businessinsider.com/population-boom-south-texas-georgia-dallas-houston-atlanta-movers-homebuyers-2024-3">move South</a> in recent years — boosting the region's labor force and consumer <a target="_blank" class="" href="https://www.bea.gov/news/2023/personal-consumption-expenditures-state-2022">spending</a>.However, some economic measures show the South is lagging behind other regions of the US. And even if some of the region's cities and states prosper in the years to come, other areas could miss out on the economic boom.<h2 id="858fbdc9-29ae-4b33-8a5d-210eb5d9b9dd">Workers in Southern states tend to have lower wages</h2>An <a target="_blank" href="https://www.epi.org/publication/rooted-racism-part3/">analysis</a> of 2021 current population survey data published in July by the Economic Policy Institute, a left-leaning think tank, found that workers in the South earned less than those in other regions.The median Southern worker earned $20.30 an hour, compared to $21.05 in the Midwest, $22.08 in the West, and $23.81 in the Northeast. Additionally, the analysis found that 22% of Southern workers earned less than $15 an hour, compared to 17% in the Midwest, 12% in the Northeast, and 10% in the West.The Economic Policy Institute pointed to low <a target="_blank" href="https://www.businessinsider.com/map-the-last-time-each-state-raised-its-minimum-wage-2021-2">minimum wages</a> and <a target="_blank" href="https://www.businessinsider.com/labor-union-membership-fell-lowest-rate-record-2022-2023-1">unionization rates</a> in Southern states as two factors keeping pay down.Of course, workers in some Southern states earn less than others. In July, the Economic Innovation Group, a centrist think-tank, published an <a target="_blank" href="https://eig.org/wp-content/uploads/2024/07/TAWP-Kirkegaard.pdf">analysis</a> by Jacob Funk Kirkegaard, a nonresident fellow with the Peterson Institute for International Economics. Using US Bureau of Economic Analysis and Bureau of Labor Statistics data, the analysis highlighted the average annual wages across US states as of 2022.Mississippi had the second lowest average annual wage in the US at roughly $60,000 — only Hawaii ranked lower. Texas was the only Southern state in the top 10, ranking 8th with an average annual wage of about $80,000.<h2 id="1ecaa78f-0299-48c6-9804-8102c4eabe31">The South's low unemployment rate is misleading</h2>In recent years, the South has had a <a target="_blank" href="https://institute.bankofamerica.com/content/dam/economic-insights/regional-morsel-southern-economy-trends.pdf">low</a> unemployment rate compared to other US regions. But an <a target="_blank" href="https://www.epi.org/publication/rooted-racism-part2/#epi-toc-6">analysis</a> published in June by the Economic Policy Institute called the low jobless rate "misleading."That's because only people who are <a target="_blank" href="https://www.businessinsider.com/september-jobs-report-263k-payrolls-unemployment-rate-hiring-labor-market-2022-10">actively looking for work</a> are counted in official US unemployment statistics. And there's evidence to suggest many Southerners have given up looking or faced obstacles to employment, Chandra Childers, senior policy and economic analyst at the Economic Policy Institute, wrote in the analysis.As of 2022, the share of people aged 25 to 54 with jobs was lower in the South than the rest of the US, according to the Economic Policy Institute's analysis of Current Population Survey data. That so-called <a target="_blank" href="https://www.businessinsider.com/us-men-working-less-recessions-employment-productivity-2024-4">prime-age employment rate</a> — an oft-cited indicator of labor force strength — was 78.9% in the South, 79.2% in the West, 80.6% in the Northeast, and 81.9% in the Midwest.It's possible these figures could change as more updated data becomes available. But if people in the South are less likely to have jobs than people in other regions, then the region's low unemployment rate doesn't tell the full story.<h2 id="f8b9eb0e-36e7-48fb-9e8e-2275ade9e55e">There are reasons to be optimistic about the South's economy</h2>To be sure, it's not all doom and gloom for the South.A thriving economy needs people to work jobs and spend money, and the South is <a target="_blank" class="" href="https://www.businessinsider.com/city-metro-population-growth-from-2022-to-2023-florida-2024-3">boosting its population</a> in all sorts of ways.While the US has experienced a <a target="_blank" href="https://www.businessinsider.com/us-population-stalled-during-pandemic-slower-than-during-great-depression-2022-1">population slowdown</a> in recent years, the South has the <a target="_blank" href="https://www.businessinsider.com/best-economy-us-south-texas-florida-houston-dallas-nashville-miami-2023-12">highest birthrate</a> of any region. And when people are born there, they often don't leave. Eighty-two percent of native-born Texans still resided in the state as of 2021, the highest rate in the US, according to a Dallas Fed <a target="_blank" href="https://www.dallasfed.org/research/economics/2023/0829">analysis</a> published in August 2023. North Carolina and Georgia rounded out the top three.Many Americans not born in the South have moved there as well. Between July 2022 and 2023, the states with the <a target="_blank" href="https://www.businessinsider.com/state-population-growth-declines-map-moving-migration-census-2023-12">largest population growth</a> were all located in the South: Texas, Florida, North Carolina, Georgia, South Carolina, and Tennessee. Only two Southern states — Louisiana and West Virginia — were <a target="_blank" href="https://www.census.gov/newsroom/press-releases/2023/population-trends-return-to-pre-pandemic-norms.html">among</a> the eight US states that saw their populations decline between 2022 and 2023.Overall, there's plenty of reason to be optimistic about the future of the South's economy. However, it's still a work in progress, and some states are thriving considerably more than others.Have you moved into or out of the South over the past few years and are willing to share why you relocated? Or, are you a Southerner who is willing to talk about the influx of new residents? If so, reach out to this reporter at <a target="_blank" href="mailto:jzinkula@businessinsider.com">jzinkula@businessinsider.com</a>.

The South's economic boom is masking a harsher reality. It still has several of the poorest states in the nation. 

In January, Jon Bach got laid off as a director at eBay, where he had worked for 13 years. He loved his job, so he was disappointed. But he didn't panic. The unemployment rate was near a five-decade low, and he had 30 years of experience in the tech industry. How hard could it be to find another job?Pretty hard, it turned out. After applying for 135 openings, Bach has received 91 nonresponses, 42 rejections, two callbacks — and zero offers. "I don't know what's going on," he says. "I've been doing this for a minute, and I've proven my value. And then you apply to one place, two places, 10 places, 50 places, 135 places. And you go, 'Am I the guy I think I am?'"By all the standard economic measures, America's labor market looks fine. But ask white-collar professionals who are actually looking for a job, and they'll tell you horror stories that are eerily similar to Bach's. As I wrote last spring, that's because the job market has essentially split into two distinct tiers. Even though hiring has held up well for lower-earning workers, it has plunged for people earning six figures or more. We're in the midst of a <a target="_blank" href="https://www.businessinsider.com/hiring-slump-professional-white-collar-jobs-recession-high-salary-2024-4">white-collar recession</a>.Now, new data from LinkedIn — which tracked how often its users landed new jobs — shows which white-collar jobs are being hit the hardest. Some of them are the usual suspects in a downturn. You don't need recruiters when you're not recruiting, so hiring in human resources has slumped by 28% since 2018. Hiring in marketing, another department that's often the first to lose its budget in leaner times, is down 23%.But the most surprising feature of the job freeze is the pullback in tech. Hiring has plunged 27% in IT, 32% in quality assurance, and 23% in product management. In Bach's field of program and project management, recruitment has slumped 25%. Even more surprisingly, engineering, which was long considered recession-proof, is down 26%. That kind of cutback in coders was long unthinkable in Silicon Valley, which treated programmers like rare minerals — so scarce that they needed to be preserved at all costs, regardless of how the economy was faring.On the flip side are the professions that are holding up well. Military and protective services, a category that includes security guards, is down only 6%. Community and social services is down by only 3%. And healthcare, which is battling an acute staffing shortage fueled by an aging population and extraordinary levels of burnout on the front lines, is actually up 10%. You can see the same winners and losers on hiring platforms like Indeed: Since the pandemic, job postings for physicians and physical therapists have surged more than 80%, while those for software developers, data analysts, data scientists, and IT operations have declined by 20% or more."We have not seen the hiring slowdown everywhere," says Kory Kantenga, an economist at LinkedIn. "But there are particular areas where it's been very dramatic."Why has tech slammed the brakes on hiring? One reason is that tech companies, panicked by the <a target="_blank" href="https://www.businessinsider.com/the-great-reshuffle-upward-mobility-quitting-jobs">Great Resignation</a> that followed the pandemic, hired way too many professionals — leaving them with a glut of staff when the economy hit the skids. LinkedIn, which compared recruitment in 2018 to 2022, found that post-pandemic hiring spiked 89% for product managers, 79% for HR professionals, and 43% for engineers. When employers realized that they'd gone overboard, some resorted to mass layoffs to slash their headcounts. But most have taken a gentler route, implementing hiring freezes to slowly shrink their ranks by voluntary attrition.Another reason tech companies are hiring fewer professionals is that their existing employees are opting to stay put. "One of the things we hear repeatedly is that candidates are looking for stability," says Jenny Diani, a senior director of global technical recruiting at Autodesk, a leading software provider. "Candidates are being much more careful." Visier, an HR software provider, reports that so far this year, voluntary turnover at its tech clients is under 20% — down from almost 27% in 2022. That means a company that wants to maintain a head count of 10,000 employees would need to hire 720 fewer professionals this year.AI may also be playing a role in the hiring freeze. With tools like ChatGPT enabling tech workers to complete tasks more quickly, employers may see less of a need to increase head count. Nowhere is this productivity gain more evident than in <a target="_blank" href="https://www.businessinsider.com/chatgpt-ai-technology-end-of-coding-software-developers-jobs-2023-4">coding</a>: In an early study of an AI coding copilot, AI-assisted programmers were 56% faster than programmers working alone. Google recently boasted that more than a quarter of its new code is now being <a target="_blank" href="https://www.businessinsider.com/google-earnings-q3-2024-new-code-created-by-ai-2024-10">generated by AI</a>."It's not like you're going to lay off a whole team," says Jon Stross, a cofounder of Greenhouse, one of the biggest providers of hiring software. "But maybe we don't have to grow quite as fast because we can automate more things and be more efficient. My guess is there are folks who are trying to make that happen."To make matters worse, changes in the way companies hire people are making the job freeze feel even more terrible than the numbers indicate. Several job seekers I spoke with told me their searches have been "slow" — which is putting it mildly. In mid-2021, according to Greenhouse, it took its clients an average of 52 days to make a hire. In the first quarter of this year, searches were dragging out to 66 days.The slowdown in decision-making is a bit of a paradox. Given all the qualified candidates on the market right now, you'd think companies would have an easier time making a selection. But weirdly, the seemingly infinite supply of candidates makes them want to review even more applications before they make a decision. "In the recruiting world, we call it See More Disease," says Diani, who is juggling three times as many job applications at Autodesk as she did during the Great Resignation. "We really need to coach our managers that even in this market, people with highly qualified, in-demand skills aren't going to be sitting around forever."<div type="image" title="Dashboard with various summary stats of job seeker's job search" height="757" width="1209" msid="115416165" hostid="261" sizebytes="43790"></div>What shocks job seekers the most, though, is how many roles they have to apply for just to get a few measly callbacks. The 135 applications that Bach submitted might seem crazy high, but these days it's actually the new norm. Santiago Rodriguez, a data scientist, told me he had applied to 669 positions — so many that he built an <a target="_blank" href="https://job-search-cd9a22.gitlab.io/">online dashboard</a> to track his progress. Like the diligent statistician he is, he plans to analyze the data to see which versions of his résumé are generating a higher success rate.It doesn't help that job candidates, desperate to land a new role, are responding to the hiring slowdown by applying to every job in sight. LinkedIn has an "Easy Apply" button that makes it easy to flood the market with applications, and AI-powered services will even <a target="_blank" href="https://www.businessinsider.com/job-applications-hiring-ai-bots-spam-resume-cover-letter-2024-3">mass-apply to jobs</a> for you. It makes sense for individual job seekers to maximize their chances by applying widely. But the more everyone piles on, the harder it gets for anyone to stand out. In the first quarter of this year, job openings at Greenhouse's clients received an average of 222 applications — almost three times as many as at the end of 2021. "It's exacerbated by everyone in this arms race applying to so many jobs that companies are just overwhelmed with applicants," says Stross. "And so they don't get back to people."For job seekers, being ghosted makes the process feel downright dehumanizing. "There's so much angst," says Stross. "Like: 'I need a job and I can't get anybody to look at my résumé.'"The good news is, some data suggests that we're already past the worst of the white-collar recession. At the end of last year, according to the industry group CompTIA, companies posted only 144,000 new tech roles. That has now rebounded to 223,000 openings — and is starting to approach the pre-pandemic level of 322,000 jobs. "We're slowly, slowly recovering," says Art Zeile, the CEO of Dice, a tech job board. The hope is that in the new year, with the election over and a couple more interest-rate cuts under the economy's belt, white-collar employers will regain their appetite to start hiring again."I'm hopeful," Bach told me. "I think a lot of people like me are eager to get back to work, to show companies that we're worth taking a chance on. If you take a risk on me, I'll show you that I'm worth it."<a target="_blank" class="" href="https://www.businessinsider.com/author/aki-ito">Aki Ito</a> is a chief correspondent at Business Insider.

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