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Rising Unemployment Rates and Inflation Concerns Signal Possible US Recession

BySamantha Nguyen

Mar 27, 2024
Do Not Use the Sahm Rule Recession Indicator on States

The United States has been on a “recession warning” for the past two years, and despite a brief respite entering 2024, the alarms are ringing once again. This time, the concerns are not focused on the usual indicators such as an inverted Treasury market yield curve or low consumer and business sentiment. Instead, economists are pointing to the rising unemployment rates in several states as a potential sign of an impending recession – or even one that may already be here.

One of the primary reasons for these warnings is a recession indicator known as the Sahm rule, developed by an economist. The premise of this rule is simple: if the three-month average of the unemployment rate is half a percentage point or more above its low in the prior 12 months, it indicates that the economy is in a recession. When applied to individual states, this rule suggests that 20 of them should be in a recession, as they collectively account for more than 40% of the US labor force, including California, which alone represents 11%.

The implications of these warnings are significant, as a recession in even just a few states could have a ripple effect on the broader economy. It is essential for policymakers and businesses to closely monitor these indicators and take appropriate actions to mitigate the potential impact of a downturn. Only time will tell whether these warnings are accurate, but it is crucial to be prepared for any economic challenges that may lie ahead.

Another factor contributing to this recession warning is inflation concerns. As prices rise due to supply chain disruptions and other factors, consumers and businesses alike may struggle to make ends meet. This can lead to decreased spending and investment, further exacerbating economic instability.

In addition to these external factors, some experts predict that technological advancements may also play a role in future recessions. As automation and artificial intelligence continue to disrupt traditional industries such as manufacturing and transportation, many workers may find themselves out of work or struggling to adapt.

Given all of these factors at play, it is clear that policymakers must act quickly if they want to prevent another recession from occurring. This may involve implementing new policies aimed at stimulating job growth and investment in technology education programs.

Ultimately, only time will tell whether this latest round of recession warnings will prove accurate. However, it is important for everyone involved – policymakers

By Samantha Nguyen

As a content writer at newsqwe.com, I am passionate about crafting engaging and informative articles that captivate our audience. With a background in journalism and a keen eye for detail, I strive to deliver content that is not only well-researched but also adds value to our readers' lives. From breaking news stories to in-depth features, I take pride in my ability to tell compelling stories that resonate with our diverse audience. When I'm not typing away at my keyboard, you can find me exploring new cafes, practicing yoga, or getting lost in a good book. I am thrilled to be a part of the newsqwe.com team and look forward to sharing my love for writing with all of our readers.

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