Unemployment Rates in 20 States Indicate Possible US Recession, Experts Warn

Cease Utilizing the Sahm Rule Recession Indicator for States

Over the past two years, the United States has been on high alert for a recession. Despite a brief reprieve at the beginning of 2024, the warning bells are ringing once again. This time, however, the indicators that are causing concern are not the usual ones such as an inverted Treasury market yield curve or low consumer and business sentiment. Instead, some economists are pointing to rising unemployment rates in several states as a sign that a recession may be on its way.

The warning is based on an economic indicator known as the Sahm rule, which was developed by an economist. The rule is straightforward: if the three-month average of the unemployment rate is half a percentage point or more above its low in the previous 12 months, the economy is in a recession. When applied to individual states, this rule reveals that 20 of them should be in a recession. These states account for over 40% of the US labor force, including California alone which accounts for 11% of it.

The concerns about a possible recession have been heightened by recent developments such as rising unemployment rates in several states. Some economists believe that if these trends continue unchecked, it could lead to an imminent or already underway recession. It’s important for us to closely monitor these indicators moving forward to fully understand where we stand with our economy and prepare accordingly.

In conclusion, while there are various factors that can contribute to an economic downturn, rising unemployment rates should not be overlooked as they could signal potential problems ahead. As such, it’s crucial to keep track of these indicators and remain vigilant in order to navigate any potential challenges that may arise.

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