The Sahm Rule Recession Indicator, created by economist Claudia Sahm, is gaining recognition as a powerful tool for predicting economic recessions in the United States. This indicator has caught the attention of policymakers, investors, and analysts alike because of its simplicity and accuracy.
The Sahm Rule is based on the idea that when the three-month average national unemployment rate rises by 0.5 percentage points or more above its lowest point from the previous 12 months, a recession is imminent. This rule was developed by Sahm during her time working at the Federal Reserve, where she analyzed decades of economic data to identify patterns that precede recessions.
One of the key benefits of the Sahm Rule is its simplicity. Unlike other economic indicators that require complex models and data analysis, the Sahm Rule only focuses on one variable – the national unemployment rate. This makes it easy to understand and use for both experts and laypeople.
Moreover, the Sahm Rule has proven to be highly accurate in predicting recessions. In a study conducted by Sahm, she found that the rule correctly identified every recession in the United States since the 1970s with a lead time of about 12 months. This makes it a valuable tool for policymakers and investors who want to prepare for economic downturns in advance.
The Sahm Rule also has practical implications for policy decisions. By identifying early warning signs of a recession, policymakers can take preemptive measures to mitigate its impact and support the economy. For example, they can implement stimulus packages, monetary easing, or other measures to cushion the economy against the effects of a recession.
In conclusion, the Sahm Rule Recession Indicator is a valuable tool for predicting economic recessions in the United States. Its simplicity, accuracy, and practical implications make it a powerful tool for policymakers, investors, and analysts. As the economy becomes increasingly volatile and unpredictable, the Sahm Rule offers a reliable way to anticipate and prepare for downturns.
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my macro hat again
Interesting video Ben thanks
This was great
First time in the cryproverse in a long while.
When did that bookshelf arrive?
I'm floored by actual items in that room besides a single chair.
Good one. Would be nice to come keep eyes on this more often
But the labor market isn’t tight. The unemployment rate counts the people actively looking for jobs. If someone stops looking for a job for 2 months, they no longer are counted in unemployment.
Look at all the Help Wanted Signs. Look at the store hours at places like Walmart, Target, Kroger. Places that were 24 hours now are closed for 6/7 hours because they do not have the man power.
Inflation is more likely 16% – 20%. Coka-Cola increased their prices by 17%. Housing/cost of living prices aren’t counted in the government’s inflation indicators. Neither are energy. Or most food.
So by the chart we are NOT in a recession. But in reality…. The entire chart is based on false numbers