What Is The Sahm Recession Indicator

The Sahm Recession Indicator: A Warning Sign for the Economy

What is the Sahm Recession Indicator?

The Sahm Recession Indicator is a measure that signals the start of a recession when the three-month moving average of the national unemployment rate U3 rises by 0.50%.

How does it work?

The Sahm Recession Indicator is based on the idea that a recession is underway when the average unemployment rate rises significantly in a short period of time. This is because a rapid increase in unemployment is typically a sign that the economy is contracting and jobs are being lost.

What are the implications?

The Sahm Recession Indicator is a valuable tool for policymakers, economists, and investors. It can provide early warning of an impending recession, which can help them to take steps to mitigate its impact. For example, policymakers can use the indicator to develop policies that support employment and economic growth. Investors can use the indicator to make informed decisions about their portfolios.