Bleak Economic Outlook: 20 States on Recession Alert, Unemployment Rates Rise as Experts Warn of Imminent Recession

Cease Utilizing the Sahm Rule Recession Indicator for States

For the past two years, the United States has been on a “recession warning,” despite a brief period of calm at the beginning of 2024. This time, the alarms are once again going off, and economists are pointing to rising unemployment rates in several states as a sign that a recession is looming or may already be here.

The warning is based on a recession indicator known as the Sahm rule, developed by an economist. The rule is simple: 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. Applying this rule to individual states reveals that 20 of them should be in a recession. These states account for over 40% of the US labor force, including California, which alone makes up 11% of the labor force.

The concerns about a potential recession are heightened by the fact that the unemployment rate in several states has been rising. This has led some economists to believe that a recession may be imminent if not already underway. It is important to monitor these indicators closely in the coming months to understand the true state of the economy and prepare for any potential challenges ahead.

Despite this warning, some experts believe that it may be too early to call a full-blown recession just yet. They argue that there are still other factors at play that could influence economic conditions, such as inflation and interest rates.

However, even if it’s not an official recession just yet, it’s clear that businesses and individuals need to start preparing for potential downturns. This means having cash reserves on hand, diversifying investments, and looking at ways to cut costs and streamline operations.

In conclusion, while there may still be some uncertainty around whether we’re officially in a recession or not right now, it’s clear that we need to remain vigilant and proactive when it comes to managing our finances and planning for future challenges ahead.

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