Oddbean

Wall Street is worrying about the 'Sahm Rule' that predicts recessions—but its creator is not, yet ========== Former Federal Reserve economist Claudia Sahm cautions against prematurely forecasting a recession using the Sahm Rule, which predicts a recession when the unemployment rate's three-month moving average exceeds the lowest three-month moving average of the past year by half a percentage point or more; Sahm argues that the risk of recession has risen due to the exodus of workers known as the Great Resignation, but other indicators such as consumer spending and non-farm payrolls are inconsistent with a broad-based weakening in activity; Sahm believes that the upward pressure on the U.S. labor market exerted by rising numbers of immigrants is artificially inflating the official unemployment rate, and official revisions to past data can also affect the reading; Sahm states that a recession is not imminent, but the risks have risen; U.S. Federal Reserve Board Chairman Jerome Powell is expected to cut interest rates to avoid a recession. #SahmRule #Recession #Unemployment #FederalReserve #ClaudiaSahm #LaborMarket #Immigration #InterestRates https://fortune.com/2024/07/29/sahm-rule-recession-unemployment/