Sahm Rule
A real-time recession indicator developed by economist Claudia Sahm that triggers when the 3-month moving average of the unemployment rate rises 0.50 percentage points or more above its lowest reading in the prior 12 months.
The Sahm Rule was designed to detect the onset of a recession in real time using only the unemployment rate — a series that is published monthly with minimal revision. When the 3-month moving average of the civilian unemployment rate (UNRATE) rises 0.5 percentage points or more above the minimum 3-month average from the previous 12 months, the rule triggers a recession signal.
The rule has correctly identified every U.S. recession since 1970 within a few months of its onset and, notably, produces very few false positives. Its simplicity is its power: it does not require modeling, revisions to prior data, or judgment calls about which coincident indicators to weigh. Claudia Sahm originally proposed the rule as an automatic trigger for fiscal stimulus, arguing that once the labor market weakens by that magnitude, the recession is already underway and stimulus should deploy immediately.
BullrunData computes the Sahm Rule live from UNRATE and factors it into the composite recession probability model. You can retrieve the underlying UNRATE data at /api/v1/indicators/UNRATE and the composite probability at /api/v1/model/probability.