The last set of jobs data showed the unemployment rate fell to 3.7% in November, while the Fed said on Wednesday it didn’t expect the jobless rate to rise higher than 4.1%. But historical data suggested around 7.5% of Americans could be without work within the next couple of years.

The sobering data from Reventure Consulting showed that since 1950, shortly after the Federal Reserve made its first rate cut the rate, of unemployment spikes.

Historically speaking, the first rate cut comes three months before the unemployment rate starts to rise and, on average, the jobless rate rises to around 7.5% during a Fed easing cycle,” a post on the The Kobeissi Letter X account said.

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Official Jobs Data

The latest official data release came on Thursday, with weekly initial jobless claims dipping to 202,000 from the previous week’s 221,000. The more telling numbers, however, are in the continuing claims, which have trended higher since September.

“The rising trend in continuing claims suggests that people are finding it harder to obtain a new position,” said Ian Shepherdson at Pantheon Macroeconomics. “That's reflected in the deterioration in the ‘jobs plentiful’ and ‘jobs hard to get’ readings in the Conference Board consumer confidence survey.”

Recent monthly purchasing manager surveys have also reflected falling headcounts. The November manufacturing purchasing manager index (PMI) eased to 49.4, indicating economic activity in the sector was falling.

The iShares U.S. Industrials ETF (NYSE:IYJ) which tracks companies in the U.S. manufacturing sector, was up 1.1% in early trade.

This month’s non-farm payrolls report showed just 28,000 jobs added to the manufacturing sector in November, and this was flattered by 30,000 Union of Auto Workers members returning to work after a strike. That suggests a net 2,000 lost jobs.

Perhaps the most sobering data to come from the December payrolls report was a loss of 38,000 jobs in the retail sector — mainly in areas of discretionary spending such as department stores and electrical, furniture and appliance retailers.

The SPDR S&P Retail ETF (NYSE:XRT), which tracks retail stocks on the S&P 500, was up 2% in early trade.

Cutting Into Market Downturns

While the Reventure Consulting data is interesting, it’s little surprise that unemployment rises during rate cut cycles given that control over interest rates is a policy tool used by the Fed to help maintain its dual mandate of maximum employment and inflation at a target of 2%.

Forward looking surveys such as PMIs and consumer confidence measures can indicate ahead of the official data that stress in industrial activity and consumer demand are emerging.

And that appeared to be happening — there are few economists who fail to believe an economic slowdown is already underway, and during economic slowdowns, people lose jobs and central bankers cut interest rates.

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