According to PANews, Claudia Sahm, founder of the Sahm Rule and chief economist at New Century Advisors, has expressed concerns that the U.S. economy is alarmingly close to a recession. Sahm stated that while the economy has not yet entered a recession, the increasing risk justifies a reduction in interest rates by the Federal Reserve. She highlighted that the rise in unemployment over the past year, as indicated by the Sahm Rule, now exceeds normal levels and is worryingly close to recessionary conditions. Sahm emphasized that it is time for the Federal Reserve to utilize its tools and lower interest rates.
The Sahm Rule is an economic indicator that predicts recessions. It posits that a recession begins when the three-month moving average of the unemployment rate rises by 0.5 percentage points above its low point over the past year. This metric has shown that the current unemployment rate is nearing levels that signal a recession, reinforcing Sahm's call for the Federal Reserve to take action.