by Elliott Middleton at End Times Meditation Substack h/t ZeroHedge
The BLS is reporting the March unemployment rate down slightly to 3.8 percent, nowhere near the 4.5 percent that it will take to trigger a collapse of confidence. ZeroHedge has detailed how fake the BLS’s numbers have become in a series of recent posts (here’s today’s).
When I was in academics, my research program was on the application of psychology to economics, especially the fundamental psychological law of sensitivity to adaptation level. Back in the 1990s, I was featured in a front-page article in the Wall Street Journal on “animal spirits” or confidence levels.
I discovered that when the unemployment level rises above a 4-year exponential moving average of the unemployment rate (in which more recent observations are weighted more heavily), confidence collapses, the unemployment rate skyrockets upward, and economic activity contracts sharply. This event marks the end of the business cycle.
While the economy has been stagnating for most people recently, we have not experienced this signal event, the collapse of confidence that occurs when the recession begins.
The post below describes my intellectual journey and was published in ZeroHedge on June 21, 2022, and is highly recommended if you haven’t read it already.