As shown by my last couple of posts, I’ve been skeptical of the upbeat “no recession” story that many economists and journalists have been putting out. This morning’s jobs report confirms my sense that we have at least one more downleg to go…and it may be a deep one.

The unemployment rate jumped from 5 to 5.5% That’s the highest level since 2004. Equally important, the number of jobs continued to fall. Without the continuing hiring by healthcare, social assistance, and education—all government-funded to a large extent—we would be in a spectacular downturn. Private sectors jobs fell by 66K in May…outside of healthcare, social assistance and education, private jobs fell by 120K.

Over the last year, the contrast is even greater. Since last May, private sector jobs are up by 16K. But healthcare, education, and social assistance were up by 577K. That means almost everything else is in free fall.

Will the Fed make another move to cut rates after this employment report? Not right away. But if it continues another month, the threat of a deep recession could be the trigger for more rate cuts.