Is Unemployment In the US Really Down to a Record Low?

In a year marred by a parade of high-profile layoffs, the self-proclaimed “Bond King,” Jeffrey Gundlach, is casting doubt on the validity of some key employment data. Gundlach, who heads the bond giant DoubleLine Capital, raised eyebrows during a recent appearance on “Making Money with Charles Payne,” where he scrutinized state unemployment figures he deemed “hard to believe.”

According to Gundlach, a staggering 88% of states, including the District of Columbia, have reported a surge in unemployment over the past six months. This skepticism comes in the wake of the December jobs report, which showed an unexpected drop in the U.S. unemployment rate to 3.7%. Despite this seemingly positive national trend, a recent report reveals a disconcerting surge of 98% in job cuts.

Gundlach dismissed the notion that states with declining unemployment rates, such as Texas and North Dakota, could offset the rising joblessness in states like Florida, Illinois, California, and New York. Expressing his distrust in the data.

The renowned bond fund manager drew parallels between the current economic climate and the “inflation fight” of the late 1970s to early ’80s, expressing concerns about a looming recession. Gundlach highlighted the inverted yield curve, a trend persisting for over 80 weeks, and drew ominous comparisons to the era when a similar phenomenon heralded a recession.

Despite the prevailing economic uncertainty, Gundlach offered his outlook for the 2024 markets. He predicted that Federal Reserve Chair Jerome Powell would opt for rate cuts, a move he attributed not just to political considerations but to the underlying stability of the economy and real interest rates. Advising investors, he suggested locking in rates with two-, three-, and five–year treasuries, emphasizing the importance of securing rates above the falling inflation rate.

As the economic landscape continues to evolve, Gundlach’s skepticism adds a unique voice to the ongoing discourse surrounding the reliability of employment data and the potential challenges that lie ahead for the U.S. economy.