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- Named after American economist Claudia Sahm, the rule says if the average unemployment rate over three months is half a percentage point higher than the lowest level over the past 12 months then the country is at the beginning of a recession. In this case, the US unemployment rate rose in July, so the three-month average was 4.1%.
www.bbc.co.uk/news/articles/cvgdd0xvxd7oIs the US economy heading for recession after stock market ...
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When will a recession start?
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Aug 8, 2024 · How does a recession start? Recessions can start in a number of ways, from financial imbalances, such as the collapse of the housing market in 2006, to an economic shock, like the pandemic ...
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Here's the good news about the U.S. economy right now: Despite a wave of high-profile layoff announcements, most workers are still employed. Last week, the Bureau of Labor Statistics reported that the number of people filing for unemployment benefits fell to a nine-month low of 186,000. The unemployment rate remains at 3.5%, the lowest in a half-century. And there are about 10.5 million job openings.
Yet many economists believe we are heading for some type of economic recession. It just might not look like the recessions we've previously experienced in the U.S.
"I think the characteristics of this recession are likely to be different than prior ones," said Gregory Daco, the chief economist at Ernst and Young's EY-Parthenon consulting group. He cited two reasons: the state of household finances, like healthy savings rates and relatively low levels of debt, and demand for labor, which continues to be resilient.
"So we have not seen the type of severe pullback we usually see at the onset of a recession, where businesses look to cut costs rapidly," he said. "So the pullback is likely to be softer and more gradual than in the past. We're not going to see broad-based layoffs."
Why, then, could the U.S. still be marching toward a recession? Daco said consumer spending levels appear to have peaked several months ago. In addition, people have begun working fewer hours, and manufacturing activity has begun to pull back.
"So across the economy there are more indications that the economy is slowing down materially, and that’s typically the sign of the onset of a recession," Daco said.
Michael Antonelli, a managing director and private wealth manager at the financial services company Baird, said that to get a soft landing, inflation would have to fall significantly, corporate earnings would have to hold up, and the job market would have to stay strong.
The odds of sticking that “landing” are going to be tough — but not impossible — Antonelli said.
"A soft landing is a long shot by any probability — it's never really happened before," he said. "Any time inflation has been this high, we have a recession to bring it under control. There aren't a lot of historical analogies for a soft-landing scenario."
Many economists agree that the U.S. is, for now, not in a recession. The most recent gross domestic product report published last week showed the U.S. economy grew by 2.9% in the fourth quarter of 2022, following growth of 3.2% in the quarter before. That's more than enough to overcome one technical definition that a recession equals two consecutive quarters of negative growth.
But the same economists still foresee a "mild" recession's hitting soon.
“The mix of growth was discouraging, and the monthly data suggest the economy lost momentum as the fourth quarter went on,” Andrew Hunter, a senior U.S. economist for Capital Economics, wrote of the latest GDP report. “We still expect the lagged impact of the surge in interest rates to push the economy into a mild recession in the first half of this year.”
Apr 27, 2023 · WASHINGTON (AP) — The government’s report Thursday that the economy grew at a 1.1% annual rate last quarter signaled that one of the most-anticipated recessions in recent U.S. history has yet to arrive. Many economists, though, still expect a recession to hit as soon as the current April-June quarter — or soon thereafter.
May 4, 2022 · The US is facing the familiar precursors of a recession, including rising interest rates following high inflation. The Fed's decisions will be critical Many economists are warning of a recession, while Wall Street bulls are saying those fears are overblown.
Jun 8, 2020 · The U.S. is officially in a recession, bringing an end to a historic 128 months of economic growth, after the coronavirus pandemic swept the country and shut down the economy.
Feb 27, 2023 · The findings, reflecting a survey of economists from businesses, trade associations and academia, were released Monday. A third of the economists who responded to the survey now expect a recession to begin in the April-June quarter. One-fifth think it will start in the July-September quarter.
Aug 9, 2024 · Fears over a looming US recession triggered a sharp drop in global markets this week, but many economists think those fears are overblown. The sell-off reflected worries that the US Federal ...
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