The risk of a recession is real, but the stock market meltdown is overdone

?? Welcome to Trendlines. Today's secret word is SELL!

I'm Boston Globe financial columnist Larry Edelman , and in this edition I’ve got breaking news on the stock market's meltdown.?

Plus: the DiCaprio effect when dating after 50.

Trendlines is my twice-weekly newsletter for Boston Globe Media . Click the subscribe button to keep on top of business and the economy in the region and beyond.

Fear factor

?? Happening now

US stock prices fell sharply Monday morning, following losses in the previous two sessions, amid high anxiety that a deteriorating job market will trigger a recession.

• Losses were led by big tech stocks — including Apple, Meta, and Nvidia — that pushed the market to record highs just last month.

• Stocks trimmed some of their declines as the day went on.

?? Driving the news

The job market is losing steam fast.

• The Labor Department said on Friday unemployment unexpectedly rose two-tenths of a percentage point to 4.3 percent in July, the highest level since October 2021.

• Employers added a surprisingly small 114,000 jobs last month, down from an average of 218,000 jobs a month in the first six months of the year.

?? Told you so

I’ve argued — as recently as last week — that the Fed has beaten inflation and it is past time to cut rates to support employment and help the struggling housing market.

Now what?

Central bankers next meet in mid-September. At a news conference after the rate announcement, Fed chair Jerome Powell said a cut would likely be on the table.

• Investors in futures markets have priced in a 90 percent chance that the Fed will cut its benchmark lending rate by one-half of a percentage point in September. A quarter-point move is more customary.

• That reflects the growing conviction that the Fed is behind the curve and will be forced to quickly drop rates to prop up the economy.

???? Take a deep breath

Wall Street is overreacting.

• Powell says the overheated labor market of 2022 and 2023 has simply returned to its more sustainable level of 2019, before the pandemic turned everything upside down.

• And economist Claudia Sahm, who believes the Fed should have cut rates already, thinks it’s premature to say a recession is underway.

?? Final thought

Still, it’s a real possibility that what Powell called the “normalization” of the job market metastasizes into an unemployment crisis.

When the next recession will hit is anyone’s guess. But every step up in unemployment brings us closer to the inevitable.

?? Trending

Health Care : A doctor-owned health system in Michigan said it unsuccessfully tried to buy Carney and Nashoba hospitals, which Steward now plans to close.

Tech : Uber and Lyft’s AI power over drivers and riders is brought to light in a lawsuit.

Personal Finance : Customers at Schwab and other brokerage firms reported issues logging in during market selloff.

?? The Closer

Author Karen Stabiner has a guaranteed-to-fail business idea: launching a dating site for older people that requires a pledge from men to be willing to date women their own age.

In a Globe Opinion essay, Stabiner shares what she learned after signing up for a dating site. Call it the DiCaprio effect.

I was paying, literally, to be rejected by strangers for being their contemporary. Why? Appearance is the obvious answer, because our culture tells us that the very wrinkles that make a man appear dignified and wise make a woman appear wizened and tired. Beyond that, I think boomer men want someone to take care of them, despite all of their 1970s talk about equality, and they probably worry that women their own age, those noisy second-wave feminists, are going to call them on it.

You can read the entire piece here .

Thanks for reading. Trendlines will be back on Thursday.

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