Planet Money How economists (and TikTok) know if a recession is coming
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May 21, 2025 Dive into the quirky world of recession indicators, where lipstick sales rise and babysitter buns make a comeback! Discover how social media shapes economic discussions and the unconventional signs that people are tracking. Learn about the SOM rule, which helps economists predict downturns through unemployment rates and yield curves. While exploring the emotional impacts of financial uncertainty, a humorous look at cultural shifts reveals that even in tough times, self-care remains essential.
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TikTok's Quirky Recession Signs
- TikTok users spot recession signs in everyday moves like Five Guys launching combo meals.
- These quirky indicators reflect public anxiety during economic uncertainty.
No Perfect Recession Predictor
- No perfect recession indicator exists; official recessions are declared by a committee after the fact.
- This lag explains why real-time recession signals like social media trends gain traction despite limitations.
SOM Rule and Unemployment
- The SOM rule signals a recession if unemployment rises sharply beyond a threshold within months.
- It's reliable because employers delay layoffs until absolutely necessary, so rising unemployment is a strong recession signal.