This Signal Just Triggered for the First Time in 15 Years; History Shows Last 3 Times Led to Recession
- - This Signal Just Triggered for the First Time in 15 Years; History Shows Last 3 Times Led to Recession
David Dierking, The Motley FoolJanuary 28, 2026 at 6:35 AM
0
Key Points -
U.S. non-farm payrolls just had their third negative print in the past seven months.
This has only happened three other times in the past 40 years.
Two of those instances were the tech bubble and the financial crisis.
10 stocks we like better than S&P 500 Index ›
The U.S. labor market has shown signs of significant deterioration over the past year. An economy that had pretty steadily been creating 100,000-plus jobs every month has sputtered to near-stagnation.
From May 2025 through December 2025, U.S. non-farm payrolls have increased by only 93,000 jobs total, an average monthly increase of just 11,625. On top of that, the month-over-month change has been negative in three of the past seven months.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
Month
Non-Farm Payroll Monthly Change
June 2025
-13,000
July 2025
+72,000
August 2025
-26,000
September 2025
+108,000
October 2025
-173,000
November 2025
+56,000
December 2025
+50,000
Data source: Trading Economics
To provide a sense of how rare the "three in seven" signal is, it's only happened three other times in the past 40 years:
September 1990-November 1991
April 2001-December 2003
January 2008-December 2010
Right now is the fourth instance of this occurring.
Yellow caution tape with nature background.
Image source: Getty Images.
Why is this important?
All three of the previous times this was triggered coincided with major U.S. recessions.
^SPX Chart
^SPX data by YCharts
The early-1990s recession was the most benign of the three from a U.S. stock market perspective. The S&P 500 fell by roughly 20%. During the tech bubble, the index fell by nearly 50%, but the Nasdaq-100 experienced a much deeper pullback. During the financial crisis, the S&P 500 fell by more than 50%.
With stocks still near all-time highs, U.S. GDP growing at a 4% annualized rate, and the unemployment rate still below 5%, the economy would appear to still be in good shape.
This signal, however, is suggesting much tougher times ahead.
Should you buy stock in S&P 500 Index right now?
Before you buy stock in S&P 500 Index, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and S&P 500 Index wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $462,174!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,143,099!*
Now, it’s worth noting Stock Advisor’s total average return is 946% — a market-crushing outperformance compared to 196% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of January 28, 2026.
David Dierking has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Source: “AOL Money”
