Wall Street is worrying about the ‘Sahm Rule,’ which predicts recessions—but its creator is not, yet

Federal Reserve chair Jay Powell will not be able to avoid a recession, predicts Deutsche Bank. (Credit: Drew Angerer—Getty Images)

Former Federal Reserve economist Claudia Sahm cautioned against investors prematurely forecasting an imminent U.S. recession by citing the very jobs market indicator named after her. 

In a post on Substack, the founder of Sahm Consulting acknowledged that the risk of recession has certainly risen as demand for labor softens. But she argues this is largely because of lagging effects from an overheated economy, in which an exodus of workers known as the Great Resignation starved businesses of talent.