Recession Alarm.... Snooze no longer helps.

The recession alarm is no longer the speculation of a few contrarians and is screaming across global markets. Stocks are taking a beating, bond yields are tumbling, consumer confidence is deteriorating, and forward rate expectations are collapsing. Yet, against this backdrop, Powell insists the economy is “just fine.” Even President Trump, now openly admitting the economy is in a “period of transition,” and Treasury Secretary Bessent, warning of a potential “detox period,” are signaling what the data has shown for months: the artificial high of 2024 is giving way to a painful reality check.

The job market is already unraveling. January’s income growth was anemic, and February’s employment report, though spun positively by the mainstream, was a disaster. The Establishment Survey missed expectations, while hours worked have fallen to recessionary levels. Full-time jobs collapsed by 1.2 million, while the unemployment rate remained deceptively stable only because hundreds of thousands of workers were forced out of the labor force entirely. The underemployment rate soared by half a percentage point to its highest level since 2021, confirming what forward-looking indicators have been warning: the labor market is slipping, and fast.

Markets are responding accordingly. The 10-year Treasury yield has fallen to 4.22%, retracing last week’s temporary rise. The 2-year Treasury, a critical gauge balancing Federal Reserve policy expectations with economic fundamentals, is now at 3.92%, hitting a multi-month low. These moves make it abundantly clear that Powell’s insistence on economic resilience is not just misplaced, but are outright delusional. The market is pricing in aggressive rate cuts, and sooner rather than later.

The most telling sign, however, is in equities. The NASDAQ is down more than 4% today alone, extending a slide that has wiped out over 12% since mid-February. The Philadelphia Semiconductor Index, a leading cyclical indicator, is down 16% in the same period. The Russel 2000 is down some 18% from the last peak. These are not minor corrections but the early stages of a systemic repricing as investors wake up to the recessionary storm ahead. The A.I. stock euphoria is fading, and with it, the last remaining pillar of the “resilient” economy narrative.

The problem is global. Swap spreads have whipsawed violently as markets struggle to digest the sheer magnitude of economic deterioration. European and Chinese banks are retreating from lending and hoarding government bonds instead, prioritizing liquidity over growth. Everywhere you look, the financial system is bracing for impact.

None of this should be surprising. The artificial bump of late 2024, driven by election optimism, short-lived rate cut euphoria, and pre-tariff front-loading was never sustainable. Now, as those temporary supports fade, we are left with an economy that never actually recovered from the supply shock and never regained real growth momentum. Instead of a soft landing, the world is staring down the barrel of something far more familiar: a synchronized global downturn.

The Federal Reserve will cut rates, but not because it wants to stimulate growth, but because it will have no other choice. The labor market has already begun its descent, and the markets are pricing in what policymakers refuse to acknowledge. The era of complacency is over; the forgotten recession is back on the table.