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reason.com
8/5/2024, 11:04:01 AM

The Sahm Rule is triggered when the three-month moving average of the U.S. unemployment rate is more than half a percentage point above the lowest three-month moving average from the previous year.

The July unemployment rate increased to 4.3 percent, with the past three-month average at 4.13 percent, compared to the lowest three-month average of 3.63 percent from June to August 2023.

The stock market experienced a significant sell-off and bond yields fell following the release of the jobs report.

Economist Claudia Sahm, who identified the Sahm Rule, believes the current situation might be a false alarm due to changes in the labor supply since the pandemic.

The Federal Reserve held interest rates steady but indicated a potential rate cut in September, while the economy grew by 2.8 percent in the second quarter of 2024.