The Sahm Rule is an indicator that detects recessions in real-time based on changes in the unemployment rate. This rule was proposed by Claudia Sahm, a former Federal Reserve economist and a leading expert on macroeconomic policy.
Today, we learn about the Sahm Rule and more!
In this episode, Ryan Detrick & Sonu Varghese speak with Claudia Sahm, Independent Macroeconomist Consultant, about the Sahm Rule, unemployment, and the current economic landscape. They explore the Sahm Rule as an indicator of recessions, the impact of COVID-19 on the economy, and insights from Claudia's time at the Federal Reserve.
They discuss:
- The origin of the Sahm Rule and its purpose as an indicator of recession based on the national unemployment rate
- The mismatch between the supply of workers and the demand for jobs
- The importance of shelter inflation in the Consumer Price Index
- The current situation of low unemployment and strong wage growth
- Insights on the Federal Reserve's hiking and cutting policies
- The potential impact of recent productivity growth on long-term investments
- The biggest macroeconomic surprise for 2024
- The poor sentiment despite the economy performing well
- And more!
Resources:
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About our guest:
Claudia Sahm is an economist, formerly director of macroeconomic policy at the Washington Center for Equitable Growth, and a Section Chief at the Board of Governors of the Federal Reserve System. She is best known for the development of the Sahm Rule, a Federal Reserve Economic Data indicator for identifying recessions.
