Horrific jobs report appears to be the trigger for recession outlook from financial economists

Just a day after the worst jobs report since 2010 was published, financial economists from both J.P. Morgan and Deutsche Bank have put recession outlook on high watch.

Recession models followed by both institutions show an economic recession for the U.S. economy crossing the danger point, and where these indicators have successfully forecast recessions for the last 45 years.

This is what JPM said: “This morning’s employment report also raised the recession probabilities, although for counterintuitive reasons. We do not include the payrolls number in the recession model because it is subject to larger revisions than other labor market data. But the unemployment rate enters the model in two ways. As a near-term indicator, we watch for increases in the unemployment rate that occur near the beginning of recessions. So this morning’s move down in the unemployment rate lowered the recession probability in our near-term model. But we also find the level of the unemployment rate to be one of the most useful indicators ofmedium-term recession risk. So the move down in unemployment raises the model’s view of the risk of economic overheating in the medium run and raises the “background risk” of recession.” - Zerohedge

The global economy is already in an industrial recession, with most central banks just waiting on service data to call for a full blown economic downturn.  However, since most of the GDP and consumer spending models are overly manipulated with single and sometimes double ‘seasonal adjustments’, chances are good recession is already with us and the reasons behind it not being called are political rather than financial.

Declines in GDP and corporate earnings over the past year were already strong signals pointing towards a U.S. recession, and yesterday’s jobs numbers pretty much validate that assessment.  And what this portends for America in an election season will only reveal itself more when the Fed and the Obama White House are forced to capitulate and announce what bank analysts are already saying about the state of the U.S. and global economy.

Kenneth Schortgen Jr is a writer for Secretsofthefed.comExaminer.com,Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.