Masters in Business At the Money: Forecasting Recessions with Claudia Sahm
Jan 31, 2024
Claudia Sahm, former Federal Reserve economist and creator of the Sahm Rule for forecasting recessions, speaks about using labor data to forecast recessions. She discusses the effectiveness of the Sahm Rule, automatic stimulus checks, post-pandemic shortages, and the unemployment rate as a warning sign for a possible recession.
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Recession Definition
- A recession is a broad economic contraction affecting everyone.
- It impacts all industries and regions, not just specific sectors.
Recession Severity
- Recession severity varies based on the causative factors.
- The 2008 financial crisis was severe, while the 2001 dot-com bubble burst was milder.
Sahm Rule Explained
- The Sahm Rule identifies recessions by tracking the three-month average unemployment rate.
- A rise of 0.5 percentage points or more relative to the lowest average in the past year indicates a recession.