All of that was fake news
The hiring cool back in May was directly due to the opinion of Wall Street "analysts" and the Trump-hating media spreading panic for about 4 weeks. They kept bringing up the R-word.
But actual job loss was the same as the last few years average. Companies had simply decided not to hire. Why? Based on anything real? No. There was just so much media panic at the time they slowed hiring just to wait and see. That's all it was.
In an actual economic slowdown, the first thing to cool is wages and pay. Then hiring slows. Then comes the job losses (people get fired). Makes sense, yes? But in May 2019, wages were rising right into the cooling of new hiring. This was a signal that it was not real (and I pointed out the wage growth in here). Was just another temporary Wall Street freak out (exasperated by those in the media who wanted the US to go into a recession to punish the orangeman)
The reality is that the US economy has been growing for ~10 years, which I think is the longest expansion on record. So the expectation became that a slowdown must be around the corner. "Analysts" and financial writers had been waiting for an excuse to bring up "recession" and had already written their articles. But all of this opinion was emotion-driven not data-driven. Still, it was enough hoo-hah to move the bond market. Prices went up and yields fell. The result? We got headlines saying that "the bond markets were signaling a recession."
That was wrong. The yield curve doomsday scenario was wrong (it corrected). But some over-reactionary people, like Paul Krugman, over-reacted and sold everything. For them, these "signs" from the NFP and yield curve were confirmation bias that Trump was going to create another Great Depression. Once the dust settled, Krugman (and those market participants who think Krugman is smart) had lost money. Quite a bit of money. Other traders/investors made money. That's the way it goes.
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Last edited: Dec 17, 2019