The rise in unemployment to 3.9% last month means that unemployment is about to trigger the so-called Sahm rule, which has proven to be a reliable predictor of recessions in the past.
The rule, coined by former Federal Reserve economist and now Bloomberg columnist Claudia Sahm, assumes the start of a recession when the three-month moving average of unemployment rises by half a percentage point or more from its lows over the past twelve year. months.
The low point for unemployment so far this year was 3.4%. October’s figure was the highest so far this year, following two readings of 3.8% in August and September.
In a post on X, the social media platform formerly known as Twitter, Sahm said the rise in unemployment last month was not good news.
But she added that the Sahm rule “did not trigger action, nor is it on the brink,” despite last month’s increase in unemployment.
Sahm, who runs her own consultancy, says she worries her creation has become “a monster”.
“If it was ever going to break, it would be now, and I would be so happy to see it break,” Sahm said in an interview in August.