Story Highlights
The proverbial economists polled by Dow Jones might want to look for a new day job.
Their estimates for 187,000 new jobs missed Fridays jobs report by nearly 80,000, or 30%.
U.S. nonfarm payrolls grew by 266,000 in November.
Thats a nice beat, and it helps everyone feel good about the U.S. economy.
Thats OK … for now.
But payrolls are a lagging indicator. What happened last month doesnt concern me as much as whats going to happen in the months ahead.
And thats why I prefer looking at the other side of the monthly jobs report: the unemployment rate.
Take a look at this chart to see why…
It shows how the U.S. unemployment rate has changed since 1964. The shaded gray areas indicate past recessions. So, as you can see, the unemployment rate forecasts recession before it happens. Information like that can help you make money and keep it in 2020.
In a moment, Ill share one specific trade you should consider if unemployment begins to signal recession.
The internets abuzz with talks of the unemployment rate being at its lowest since 1969.
The low rate of joblessness suggests the economy will keep growing.
Again, thats great!
But not so fast the unemployment rate reaches a low point right before a recession.
The above chart goes back 55 years.
The blue line represents the rate of unemployment in the United States. You can see how it dipped back down to 3.5% in November.
As I mentioned, the vertical gray bars on the chart indicate U.S. recessions.
There is a close correlation between unemployment and recession.
I wrote about this a year ago, and I told readers: When unemployment bottoms, a recession follows. On average, the contraction begins about seven months later.
Thats powerful.
And thats why its my favorite recession indicator. Its better at predicting and timing an economic downturn than the inverted yield curve.
Now, dont get me wrong: Im not trying to scare you with talk of recession.
After all, scared investors dont make money.
But we should respect the boom-bust cycle that makes recession inevitable. It says that a bust to clean out excesses, inefficiencies and wasteful investments must follow an economic boom.
With that in mind, heres a trade for you to consider in 2020 to take advantage of an inevitable unemployment bottom…
Unemployment bottoms when economic growth begins to slow. Eventually, the economy may even contract.
But the world doesnt stop turning.
People still use crude oil, copper, steel, silver and gold commodities even if companies are cutting workers.
Commodities have already endured low prices (bust cycles) in recent years. This leaves them better-prepared to weather an economic slowdown when it comes.
The Invesco DB Commodity Tracking ETF (NYSE: DBC) is the largest U.S.-listed commodity exchange-traded fund (ETF). It tracks prices of commodities.
This will blow your mind: The price of DBC exploded 75% higher in the 12 months after unemployment bottomed at 4.4% in May 2007!
Whats more, DBC didnt stop climbing until six months after the recession began.
For comparison, the SPDR S&P 500 ETF (NYSE: SPY) lost 16% during the 12 months after unemployment bottomed.
Unemployment may drift even lower, but it will bottom.
And when that happens, you can use DBC to profit in the coming quarters.
A $54,072 Benefit Every Retiree Should See [sponsor]
Have you heard about the little-known way you could be rewarded for retiring early?
Its buried so deep amid the mountains of publicly available benefits information, most people are unaware it even exists.
And yet it could give you an extra $54,072 for retiring at 62 instead of waiting until youre 70. Click here now for more details.