As of August 2024, bond markets are signaling increasing concerns about a potential US recession, driven by weaker-than-expected economic data, particularly a disappointing July jobs report. The unemployment rate unexpectedly ticked up in July, raising fears that the labor market, which had been a pillar of economic strength, may be starting to crack under the pressure of high interest rates.

Historically, the unemployment rate has been a key indicator of the health of the US economy and labor market. During recessions, the unemployment rate typically rises significantly as businesses lay off workers and hiring slows. For example, during the brief but severe recession caused by the COVID-19 pandemic in 2020, the unemployment rate spiked to 14.8% in April 2020 before gradually declining as the economy recovered. As of July 2024, the US unemployment rate stands at 4.3%.

This question asks whether the unemployment rate will exceed 5% before 2025, a threshold that would signal a significant deterioration in labor market conditions and likely coincide with a broader economic downturn.