{"id":459067,"date":"2025-12-20T02:25:15","date_gmt":"2025-12-20T02:25:15","guid":{"rendered":"https:\/\/www.europesays.com\/us\/459067\/"},"modified":"2025-12-20T02:25:15","modified_gmt":"2025-12-20T02:25:15","slug":"sneaking-unemployment-rate-means-the-u-s-economy-is-inching-closer-to-triggering-sahm-rule","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/459067\/","title":{"rendered":"Sneaking unemployment rate means the U.S. economy is inching closer to triggering Sahm Rule"},"content":{"rendered":"

While America\u2019s labor market may not be collapsing<\/a>, Moody\u2019s Analytics has highlighted that it is inching steadily closer toward a key recession indicator, with analysts now placing the probability of an economic contraction at around 40%. <\/p>\n

According to the Bureau of Labor Statistics (BLS), the unemployment rate for November edged up to 4.6%, continuing the creep higher that analysts have been nervously monitoring<\/a> throughout the year. The BLS noted<\/a> a meagre 64,000 roles were created last month, showing little net change from April this year.<\/p>\n

While 4.6% is not a dire figure\u2014around 4% is seen as a reasonable rate of unemployment in a relatively stable economy\u2014it is markedly higher than last November, when it was 4.2%. But it\u2019s not necessarily the rate of unemployment that is making economists nervous. Rather, it\u2019s the broader trend of decline and what this demonstrates about the trajectory of the economy.<\/p>\n

In the most recent episode of Moody\u2019s podcast Inside Economics,<\/a> its chief economist, Mark Zandi,\u00a0and senior director of economic research Dante DeAntonio observed that America is close to triggering the Sahm Rule.<\/p>\n

The Sahm Rule, invented by former Fed economist Claudia Sahm, is a recession signal that is activated when the three-month moving average of the\u00a0national unemployment rate\u00a0rises by 0.5 percentage points or more, relative to the minimum of the three-month averages from the previous 12 months. In November, it stood at 0.43.<\/p>\n

\u201cWe didn\u2019t quite trigger it this month, but we\u2019re sort of on the precipice,\u201c DeAntonio said. \u201cIf it stays at 4.6% next month we\u2019ll trigger the Sahm Rule again. It\u2019ll be exactly at the threshold, just like we were in the middle of 2024.\u201d<\/p>\n

While the Sahm Rule<\/a> is fairly accurate, the U.S. economy did not in fact fall into recession last year\u2014thanks in part to the Fed engineering a \u201csoft landing\u201d via interest rate cuts. So will the same rule apply now and into 2026?<\/p>\n

Cris deRitis, deputy chief economist at Moody\u2019s Analytics, said he\u2019d place a 40% likelihood on a recession occurring next year, explaining: \u201cThe trends are not our friends here.\u201d His call is somewhat elevated from the consensus of Wall Street, which places the odds at 30% to 35%.<\/p>\n

DeAntonio and Zandi agreed with their colleague, with the latter saying: \u201cThe thing that makes me nervous and adds to my level of angst \u2026 [is] one reason why job growth is weaker is less labor supply, because of the immigration policy. That gets you to the 50K to 75K break-even monthly job number. That by itself, if nothing else was going on, is already pretty weak, and that goes to lack of bodies and lack of people to work.\u201d The break-even number is the monthly jobs growth figure needed to keep the unemployment rate steady.<\/p>\n

Demand for workers is falling, and AI is a reason<\/p>\n

If the unemployment level is relatively stable because of lack of supply, that means demand from employers is incredibly weak, Zandi said: \u201cWe could trace it back to the tariffs; we can trace it back to some of the other deglobalization efforts that the administration has engaged in, including immigration policy, because immigrants are consumers \u2026 but the other factor is AI.\u201d<\/p>\n

So far the impact from AI has been only \u201cmodest,\u201d the Moody\u2019s economist reasoned, perhaps impacting younger market entrants as opposed to the wider market. But what happens when the productivity gains from AI really become clear?<\/p>\n

\u201cThat\u2019s at least the betting in the stock markets. Stock investors are buying AI stocks thinking that we\u2019re going to see big adoption rates by businesses, that it\u2019s gonna raise productivity growth, it\u2019s gonna raise profitability \u2026 If they\u2019re half right or even a quarter right then we\u2019re in a world of outright job decline, all else being equal.\u201d<\/p>\n

Join us at the Fortune Workplace Innovation Summit <\/strong>May 19\u201320, 2026, in Atlanta. The next era of workplace innovation is here\u2014and the old playbook is being rewritten. At this exclusive, high-energy event, the world\u2019s most innovative leaders will convene to explore how AI, humanity, and strategy converge to redefine, again, the future of work. Register now<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"While America\u2019s labor market may not be collapsing, Moody\u2019s Analytics has highlighted that it is inching steadily closer…\n","protected":false},"author":3,"featured_media":459068,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[64,79,409,420,606,63887,766,67,132,68],"class_list":{"0":"post-459067","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-economy","10":"tag-immigration","11":"tag-jobs","12":"tag-labor","13":"tag-moodys","14":"tag-unemployment","15":"tag-united-states","16":"tag-unitedstates","17":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/115749527489673692","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/459067","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=459067"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/459067\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/459068"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=459067"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=459067"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=459067"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}