Chart of the week: US labor market indicator is close to signaling a recession onset
The Sahm Rule indicator has been widely recognized for its accuracy, simplicity, and ability to quickly identify the onset of a recession.
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Sahm Rule is an indicator, signaling when the US economy is falling into a recession. If the 3-month moving average of the unemployment rate rises by 0.50 percentage points or more, relative to its cycle low in the last 12 months it suggests the US is in a recession.
It is now 0.43, therefore not far away from the key threshold.
In other words, if the US unemployment rate starts rising a little bit quicker the key level will be crossed.
The jobless rate has already increased from 3.4% in April 2023 to 4.1% in June 2024, proving that the US labor market has deteriorated.
Forward-looking indicators suggest that in the next several months the unemployment rate should begin increasing at a faster pace. More details about that in the below article:
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