EconomyAug 24, 2024
Does the Sahm Rule Point to a U.S. Recession? 📉
@visualcapitalist
What We’re Showing
This graphic shows the Sahm Rule recession indicator since 1949, based on data from the Federal Reserve.
The Sahm Rule states that when the three-month average U.S. unemployment rate increases by 0.5% from the 12-month low, the U.S. is already in a recession.
Key Takeaways
- In July, the Sahm Rule flashed red as U.S. unemployment increased to 4.3%, up more than 0.5% from its 12-month low
- The Sahm Rule has indicated virtually every recession since 1949
- One important distinction with today is that an influx of unemployed entrants into the labor pool drove half of this increase in the Sahm Rule
- By contrast, layoffs were a primary driver behind rising unemployment in past recessions
Dataset
| Date | Sahm Rule (p.p) | Unemployment Rate | Recession Date | Recession Starts |
|---|---|---|---|---|
| Nov 1953 | 0.63 | 3.5% | Jul 1953 | 4 months prior |
| Oct 1957 | 0.50 | 4.5% | Aug 1957 | 2 months prior |
| Nov 1959 | 0.60 | 5.8% | Apr 1960 | 5 months later |
| Mar 1970 | 0.77 | 4.4% | Dec 1960 | 3 months prior |
| Jul 1974 | 0.60 | 5.5% | Nov 1973 | 8 months prior |
| Feb 1980 | 0.53 | 6.3% | Jan 1980 | 1 month prior |
| Nov 1981 | 0.60 | 8.3% | Jul 1981 | 4 months prior |
| Oct 1990 | 0.57 | 5.9% | Jul 1990 | 3 months prior |
| Jun 2001 | 0.50 | 4.5% | Mar 2001 | 3 months prior |
| Feb 2008 | 0.53 | 4.9% | Dec 2007 | 2 months prior |
| Apr 2020 | 4.00 | 14.8% | Feb 2020 | 2 months prior |
| Jul 2024 | 0.53 | 4.3% |
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