• Fri. May 24th, 2024

Rising Unemployment Rates Spell Trouble: The Latest Recession Indicator to Watch out for

BySamantha Nguyen

Mar 27, 2024
Do Not Use the Sahm Rule Recession Indicator on States

Despite the brief respite entering 2024, the United States has been on a “recession warning” for the past two years. This time, the alarms are ringing once again due to rising unemployment rates in several states. Economists have identified this as a potential sign of an impending recession or even one that may already be here.

One of the primary reasons for these warnings is a recession indicator known as the Sahm rule, developed by an economist. The premise of this rule is simple: if the three-month average of the unemployment rate is half a percentage point or more above its low in the prior 12 months, it indicates that the economy is in a recession. When applied to individual states, this rule suggests that 20 of them should be in a recession, as they collectively account for more than 40% of the US labor force, including California, which alone represents 11%.

The implications of these warnings are significant as a recession in even just a few states could have a ripple effect on the broader economy. It is essential for policymakers and businesses to closely monitor these indicators and take appropriate actions to mitigate the potential impact of a downturn. Only time will tell whether these warnings are accurate, but it is crucial to be prepared for any economic challenges that may lie ahead.

In conclusion, while some indicators such as an inverted Treasury market yield curve or low consumer and business sentiment had previously raised concerns about an impending recession, now rising unemployment rates in several states are being pointed out as potential signs of an economic downturn. These warning signals must not be ignored; policymakers and businesses need to take action before it’s too late to prevent another economic crisis.

By Samantha Nguyen

As a content writer at newsskio.com, I weave words to craft compelling narratives that captivate readers and bring stories to life. With a keen eye for detail and a passion for storytelling, I strive to create engaging and informative content that resonates with our audience. Whether I'm delving into the latest news trends or exploring unique angles on various topics, my goal is to deliver quality content that informs, entertains, and inspires. Join me on this journey as we uncover the news stories that matter most.

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