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The White House hyped the latest jobs report, which came out Friday, as good news, but in reality, things aren’t as great as the spin suggests. In fact, according to a report from Benzinga, a financial news and conference company in Detroit based on the new jobs report, the United States is “close to breaching the threshold for the Federal Reserve’s ‘Sahm Rule.'”
The Data: The Sahm Rule, named for economist Claudia Sahm, is a heuristic measure used by the Federal Reserve to determine whether the U.S. economy is in a recession. The rule has correctly predicted every recession since 1950 with only one false positive in 1959.
The Sahm Recession Indicator signals the start of a recession when the three-month moving average of the unemployment rate rises by 0.5% or more relative to the minimum of the three-month averages from the previous 12 months.
The Sahm indicator reached 0.43% in June, according to the Federal Reserve Bank of St. Louis. The data is sourced from Friday’s Bureau of Labor Statistics June jobs report. The number has steadily increased since last year.
