What Can the Sahm Rule Tell Us About the Economy?
On Investing
Resilience of the Labor Market and Job Gains
The chapter discusses the resilience of the labor market and the job gains after the covid recession. The speaker mentions that the labor market is getting back on track and the job creation numbers are averaging around 200,000 per month. They highlight the importance of reaching a sustainable expansion and note that the unemployment rate has stayed below 4 percent for a long time.
In this episode, Schwab's Chief Fixed Income Strategist Kathy Jones interviews former Fed economist Claudia Sahm. And Schwab's Chief Investment Strategist Liz Ann Sonders discusses the December jobs report with Kevin Gordon. Liz Ann and Kevin look at the differences between the numbers in the household survey and the establishment survey—and how this data will affect the fight against inflation, among other topics. You can see the charts they mention in this article: Mixed Signals: December's Jobs Report.
Kathy and Claudia discuss the Sahm rule, which is an indicator of a recession, and its purpose in providing policymakers with direction for providing relief during economic downturns. The conversation then shifts to the labor market, with Claudia highlighting its resilience and the need for a sustainable expansion. The discussion moves on to inflation, with Claudia explaining that recent inflation has been driven by supply-side shocks rather than demand. She expresses confidence in the Fed's ability to reach its 2% inflation target. Their conversation also touches on the debate within the Fed and the potential impact of the Fed's communication on financial markets.
You can follow Claudia Sahm's newsletter, Stay-at-Home Macro, at https://stayathomemacro.substack.com/.
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