Thoughtful Money with Adam Taggart Economic Danger Ahead Now That Key Recession Indicator Has Been Triggered? | Claudia Sahm
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Aug 4, 2024 
Claudia Sahm, an economist who developed the Sahm Rule, discusses vital economic indicators and current recession signals. She highlights how the pandemic and geopolitical tensions influence job market dynamics. The conversation emphasizes the importance of understanding unemployment rates and the Federal Reserve's role in managing inflation. Sahm advocates for improving financial literacy to navigate economic discourse and warns of potential downturns if timely interventions aren't made.
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Sahm Rule Overview
- The Sahm Rule is an economic indicator that provides an early warning of recessions.
- It's based on changes in the unemployment rate and aims to trigger automatic, less politicized fiscal responses.
Sahm Rule's Purpose
- The Sahm Rule was developed to trigger automatic stimulus checks at the start of a recession.
- This approach aimed to remove political delays and make fiscal policy more effective.
Sahm Rule Calculation
- The Sahm Rule calculates the difference between the current three-month average unemployment rate and the lowest rate in the past year.
- A 0.5 percentage point increase signals a recession, usually about three months in.