The Sahm recession indicator triggered in July. Now both this and the Kantro indicator are signaling that a recession already started. Both have a perfect record since 1970.

13 comments

1. Where? Globally?

2. Next Fed meeting: We’re lowering rates 0.25%. That should fix it.

3. Funny I haven’t heard the narrative of a soft landing being peddled to us anymore.

4. This would have helped to see this yesterday🙃

5. The SAHM rule is so interesting in how all of a sudden it is quoted often in the media. It was invented in late 2019 and has been triggered several times since, but the rule’s creator says it isn’t applicable because covid. It claims a 100% success rate based on backtesting, but has never actually predicted a recession. Maybe it’s promoted so much because a woman came up with it?

6. It doesn’t matter. As long as a Democrat is in the White House, the very biased NBER won’t declare a recession no matter how much the data says we are in one.

7. Never heard of it. But the claim of being perfect starting after 1970 sounds like “60% of the time it works every time” to me.

8. Here is the cold hard truth that Feds won’t openly admit:

   It takes job losses to tame inflation. Even if you don’t get laid off, but you see your coworker just got canned, then you will dial down your spending. This leads to a contraction in demand, which leads to a contraction in prices/profits. This essentially means companies will do more layoffs to minimize drop in profit. This reverberating process can take 12 months, Feds usually will drop their rates too late, because the unemployment data have a pretty big lag.

9. Sahm himself says there’s no recession and this doesn’t count.

   Stop being thirsty for a recession. It’s weird.

10. Time to buy before the Fed lowers in Sept!

11. [https://fred.stlouisfed.org/series/SAHMREALTIME](https://fred.stlouisfed.org/series/SAHMREALTIME)

    1986 it was .33 and no recession until 4 years later in 1990

    1995 .20 and no recession until 2000

    1976 .50 and no recession until 1980

12. What is scary is that inflation is still elevated. We might be looking at a stagflation event.

13. But even the developer of this index, Sahm herself, says it may be wrong this time. She says, and many other economist agree, that while it may not be signaling a recession, it is signaling that interest rates need to come down before we do get a recession.

    The reason. is that this signal typically correlate with a recession under way. But in this case, unemployment rates are so low that it is signaling earlier in the cycle.