Macro strategist Henrik Zeberg has renewed his warning that the U.S. economy is moving closer to a recession as labor market conditions continue to weaken. 

The economist has argued that slowing job creation poses a direct threat to GDP growth and, ultimately, stock market performance, he said in an X post on June 21. 

The warning follows Zeberg’s latest analysis of the relationship between U.S. nonfarm payroll growth and economic output. 

According to Zeberg, job creation and year-over-year GDP growth have historically moved almost in lockstep, making labor market trends a key gauge of economic health.

His chart shows the nonfarm payroll-to-labor force ratio has fallen to about 2.2, down from a post-pandemic peak above 7.0 in 2022. 

The indicator is now below levels seen at the start of every U.S. recession since the early 1970s, including the downturns of 1973-75, 1980, 1981-82, 1990-91, 2001, 2008-09, and 2020. 

Economy losing momentum 

While the economy has not yet entered a recession, he argued the trend signals a significant loss of economic momentum.

Zeberg’s thesis centers on the idea that economic growth depends primarily on the economy’s ability to generate jobs. 

Under this framework, a prolonged labor market slowdown would eventually weigh on consumer spending, business activity, and overall GDP growth.

His outlook shows U.S. GDP growth at 2.7% year-over-year even as labor market indicators continue to weaken. Zeberg argued that if job creation stalls, economic growth is likely to follow, increasing recession risks.

He has also pointed to rising jobless claims, slowing private-sector employment, and growing consumer strain as signs that the economy is weakening beneath strong headline data and record stock market highs.

Notably, Zeberg maintains that markets are in the final stages of a liquidity-driven asset bubble. 

Although he has previously forecast a final rally in risk assets, he continues to warn that recession risks are rising as labor market conditions deteriorate.

In recent market commentary, Zeberg said the U.S. economy is moving toward a recession that could trigger a sharp correction in stocks and other risk assets. 

He attributed the outlook to weakening business-cycle indicators, slowing job growth, elevated valuations, and rising debt levels.

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