During the past few months, the “Sahm rule” has become a ubiquitous part of the conversation surrounding issues such as the economy, unemployment and the Federal Reserve interest rate policy. The Sahm rule was created in 2019 by economist Claudia Sahm, who sought to build a recession indicator that would not be dependent on the whims of committees or politics. Instead, her rule would be rooted in one of the foundational elements that all recessions share: rising unemployment.
As of Aug. 2, the day of the July jobs report, the Sahm rule was triggered, causing many to believe we are entering a recession.
