📝U.S. States' Unemployment Trend Rises Risks Of Recession: Wells Fargo

Recent national recessions have been accompanied by a trend rise in unemployment rates across a certain proportion of states.1 Specifically, in the first month of the past six recessions, 34 states on average experienced such an increase.

The threshold was crossed in November 2022, suggesting that near-term recession risks are currently elevated. Conditions deteriorated in December when the count rose from 35 to 39. It is worth noting that not every threshold breach has coincided with a downturn. One breach occurred in August 2007, six months before the official start of the Great Recession.

Although the threshold was crossed last November, we do not believe the United States is currently in recession. That said, deteriorating state labor market conditions in the last two months of 2022 are consistent with our current macroeconomic forecast of a mild recession starting in the second half of 2023.

- Wells Fargo