Stop Applying My Recession Rule to Individual States
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Claudia Sahm, founder of Sahm Consulting and creator of the Sahm rule, argues against applying her recession indicator to individual states. Rising unemployment rates in states like California, New York, and New Jersey may seem dire, but they actually reflect economic strength. The Sahm rule states that if the three-month average of the unemployment rate is half a percentage point or more above its low in the prior 12 months, the economy is in a recession. Some economists worry that the rising unemployment rate in several states indicates a recession is coming or already here. However, applying the Sahm rule to these states would suggest that 20 of them should be in a recession, which is not the case. These states account for over 40% of the US labor force, including California, which alone has 11%.

#Recession #Unemployment #EconomicIndicators

https://www.bloomberg.com/opinion/articles/2024-03-27/stop-applying-the-sahm-rule-recession-indicator-to-states