Is a Recession Coming? Key Economic Indicators Flash Warning Signs

Recent analysis of U.S. labor market data suggests significant recession risks ahead. A critical economic signal that has reliably preceded every major downturn since the 1970s has now been triggered, according to economist Henrik Zeberg’s assessment. The troubling pattern emerges from a combination of disappointing job revisions and a key technical indicator that signals when economies enter contraction phases.

The 12-Month Moving Average Breaches Historic Recession Threshold

The core of the recession warning centers on the 12-month moving average of job creation—a metric that smooths out monthly volatility and reveals underlying employment trends. Historically, this measure has fallen below specific levels at the start of every U.S. recession in recent decades. The significance lies in its consistency: regardless of how large the labor force has grown over time, this threshold breach has never failed to precede an economic contraction.

Zeberg’s analysis reveals that this critical threshold has now been crossed. The moving average has dropped below recession-entry levels despite today’s labor market being substantially larger than in past cycles. This technical signal, combined with the deteriorating headline jobs data, forms the basis for the recession concern.

Job Market Weakening Across Recent Months

The employment picture has deteriorated significantly when examining recent months’ figures. October 2025 payroll revisions disclosed a loss of 173,000 jobs—substantially worse than the initially reported 105,000 decline. November followed with modest growth of just 56,000 jobs, well below trend levels. December 2025 added approximately 50,000 positions, marking one of the weakest December readings outside recession periods in decades.

These consecutive downward revisions paint a clear picture: hiring momentum is decelerating. Initial headlines had masked the underlying weakness in labor demand. When combined chronologically, the trend reveals a labor market steadily losing strength rather than stabilizing or recovering.

What Comes Next?

Zeberg has maintained a cautious economic outlook for an extended period, warning that a historic market correction could materialize. However, he suggests that before such a significant downturn occurs, certain asset classes—including equities and digital currencies—may still reach new peaks. The divergence between recession signals in traditional economic data and continued strength in some asset prices underscores the complexity of current market dynamics as economic headwinds gather.