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Definition

A rule that states that when the 3-month average of a country's unemployment rate increases by more than 0,5% above the lowest 3-month average of the previous 12 months, then the country is in recession. The indicator was developed by Claudia Sahm, a former Federal Reserve Bank official. On Friday 2nd August 2024 the unemployment rate rose to 4,3% in America and triggered the Sahm rule, but even Claudia Sahm said that on this occasion it was probably premature. In the past the Sahm rule has been 100% accurate as an indicator of impending recession in America.

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