My recession rule was meant to be broken
The Sahm rule indicates that the US is in the midst of a downturn, but it’s not quite there yet
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THE United States is not in a recession, despite the indicator bearing my name saying that it is. The Sahm rule, which was triggered with last Friday’s (Aug 2) weaker-than-expected jobs report, joins a long list of economic tools skewed by the unusual disruptions of the past four-and-a-half years.
That said – and I say this with a mixture of humility and concern – the Sahm rule is still relevant. The risk of a recession is elevated, strengthening the case for the US Federal Reserve to cut interest rates.
The National Bureau of Economic Research (NBER) defines a recession as a “significant decline in economic activity that is spread across the economy and that lasts more than a few months”.
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