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
