Wall Street Alarms Sound: US Job Market on the Brink of "Stall," Recession May Return to Focus!

This has been a tough year for the job market, and things could get worse. That’s the view of some Wall Street strategists and economists who believe the labor market may be on the verge of a "stall."

"Stall," originally an aviation term, here refers to a slowdown in job creation that could accelerate an economic downturn.

One of Wall Street’s prominent bears, Peter Berezin, Chief Global Strategist at BCA Research, is among those holding this view. He believes the US job market is currently on the brink of a stall.

In a recent interview, he stated that the term "stall" is somewhat broadly defined, but in his personal opinion, the job market is so weak that American consumers are starting to cut back on spending, which is hurting businesses and triggering more layoffs.

"You get a feedback loop. People get nervous, they cut back on spending, their friends see their family or friends losing jobs, and they also cut back on spending. This becomes self-reinforcing," he added.

A team of economists at JPMorgan recently stated that they have noticed the "stall." In a report to clients, the firm pointed to weak employment data and comments from Fed Chair Jerome Powell, who unusually highlighted the risks of "rising layoffs and increased unemployment" after the Fed’s July policy meeting.

Fed Governor Chris Waller also warned of this reality in a recent statement, explaining why he disagreed with the Federal Open Market Committee’s (FOMC) decision to keep rates unchanged at the July policy meeting.

"My final reason for favoring a rate cut now is that, while the labor market looks strong on the surface, once we account for expected data revisions, private employment growth is near stalling speed, and other data suggest downside risks to the labor market have increased," he said. "We should not wait until the labor market deteriorates to lower the policy rate."