doubts because the the nation has been flooded with illegals taking jobs so while the unemployment rate has gone up .5 percent from the 12 month low there is heavy demand for food, vehicles, housing etc. that would be declining under normal conditions and causing the layoffs. The layoffs could be more a substitution for cheaper labor. What is the Lounge experts opinion? From Wikiland Historical Accuracy The Sahm rule is a robust tool that has been very accurate in identifying a downturn in the business cycle and almost always doesn't trigger outside of a recession. The simplicity of the calculation contributes to its reliability. The Sahm rule signals the early stages (onset) of a recession and generated only two false positive recession alerts since the year 1959 (there have been 11 recessions since 1950); in both instances — in 1959 and 1969 — it was just a little untimely, with the recession warning appearing a few months before a slide in the U.S. economy began.[15] In the case of the false positive warning related to the year 1959 it was followed by an actual recession six months later. The Sahm rule typically signals a recession before GDP data makes it clear.[16] The Sahm rule is designed to indicate that the U.S. economy is in the early months of a recession, rather than forecasting future recessions.[17] While the historical performance and timeliness of the Sahm rule has been very accurate, the reliability of the Sahm rule in today's economy has been questioned by many economists (including Claudia Sahm) due to several distortions and there is reason to believe that the economy might act differently this time around due to unique unusual conditions.[18][19][20][21]This suggests that caution should be exercised when interpreting the Sahm rule in the current unprecedented economic situation. Like all economic indicators, it should be considered alongside other economic data and indicators. However, the Sahm Rule remains a valuable tool for economists and policymakers for early detection of economic downturns. Table: Historical accuracy of the Sahm rule; Alert coincides with recession: (U.S. unemployment rate, dates when the Sahm rule triggered & actual recession time)[22] Unemployment rate % Sahm value Time when Sahm > 0.5 Recession starts... 3.50% 0.63 Nov 1953 4 months prior (Jul 1953) 4.50% 0.50 Oct 1957 2 months prior (Aug 1957) 5.80% 0.60 Nov 1959 5 months later (Apr 1960) 4.40% 0.77 Mar 1970 3 months prior (Dec 1969) 5.50% 0.60 Jul 1974 8 months prior (Nov 1973) 6.30% 0.53 Feb 1980 1 month prior (Jan 1980) 8.30% 0.60 Nov 1981 4 months prior (Jul 1981) 5.90% 0.53 Oct 1990 3 months prior (Jul 1990) 4.50% 0.50 Jun 2001 3 months prior (Mar 2001) 4.90% 0.53 Feb 2008 2 months prior (Dec 2007) 14.80% 4.00 Apr 2020 2 months prior (Feb 2020) 4.30% 0.53 Aug 2024 - In summary, the Sahm rule's reliability lies in its consistent performance throughout various economic climates, particularly in signaling the beginning of a recession with a high degree of accuracy. ** Edited by jdkhokie at 8/8/2024, 1:34:05 PM