• Wed. May 29th, 2024

Sahm Rule Indicates Looming Recession in U.S. Economy

BySamantha Jones

Mar 27, 2024
Do Not Use the Sahm Rule Recession Indicator on States

Despite a brief respite in 2024, the United States has been on a “recession warning” for the past two years. This time, the concerns are not focused on the usual indicators such as an inverted Treasury market yield curve or low consumer and business sentiment. Instead, economists are pointing to rising unemployment rates in several states as a potential sign of an impending recession – or even one that may already be here.

The primary reason for these warnings is a recession indicator known as the Sahm rule, developed by an economist. The premise of this rule is simple: if the three-month average of the unemployment rate is half a percentage point or more above its low in the prior 12 months, it indicates that the economy is in a recession. When applied to individual states, this rule suggests that 20 of them should be in a recession, as they collectively account for more than 40% of the US labor force, including California, which alone represents 11%.

The implications of these warnings are significant, as a recession in even just a few states could have a ripple effect on the broader economy. It is essential for policymakers and businesses to closely monitor these indicators and take appropriate actions to mitigate the potential impact of a downturn. Only time will tell whether these warnings are accurate, but it is crucial to be prepared for any economic challenges that may lie ahead.

By Samantha Jones

As a content writer at newsnnk.com, I weave words into captivating stories that inform and engage our readers. With a passion for storytelling and an eye for detail, I strive to deliver high-quality and engaging content that resonates with our audience. From breaking news to thought-provoking features, I am dedicated to providing informative and compelling articles that keep our readers informed and entertained. Join me on this journey as we explore the world through the power of words.

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