A recent survey found that roughly 3 out of 5 Americans believe the U.S. is in the midst of a recession.
It’s not just the majority of Americans who feel that the U.S. has slid into a recession, there are historically reliable economic indicators that are flashing red.
In July, the unemployment rate jumped to 4.3%, triggering the Sahm Rule. Created by Federal Reserve economist Claudia Sahm in 2019, the Sahm Rule is an indicator that has accurately signaled nearly every U.S. recession since the 1950s based on historical data. According to the rule, a recession is imminent if the unemployment rate’s three-month moving average rises half a percentage point or more from its low the previous year. Following the latest unemployment numbers, the Sahm Rule hit .53%.
Another recession indicator with a perfect track record has also been flashing red now for some 20 months. In 1986, Duke University professor Campbell Harvey created the inverted yield curve, which has predicted eight out of the last eight recessions dating back to the 1960s. According to Harvey, a recession should be evident by the 23-month mark.
Distressing numbers keep being reported.
The U.S. Bureau of Labor Statistics recently announced that the economy created 818,000 fewer jobs last year than previously thought. In the last 10 years, the Bureau’s annual update has added or subtracted only about 173,000 jobs on average to the prior estimated total. The latest number is 373% higher than that average.
U.S. manufacturing activity fell to an eight-month low in July.
Business Insider reports on some of the soft signs that an economic downturn is coming. Here’s the start of the story:
Financial hand-ringing abounds these days as money managers and consumers alike eye a potential recession.
But recessions are notoriously difficult for economists to predict.
Official recession indicators are mounting. Two recession indicators — the inverted yield curve and the SAHM Rule — are flashing red. But earlier this year, financial bigwigs admitted that they got their previous predictions wrong — for now.
But for the less market-inclined money watcher, there are several simpler, stranger signs that could also point to a coming downturn.
Business Insider spoke to financial experts about the weird — and often imperfect — recession indicators they keep an eye out for in times of trouble.
“Few if any of these informal indicators are conclusive on their own, and some may simply signal changes in consumption patterns,” said Peter C. Earle, senior economist at the American Institute for Economic Research. “The confluence of many at once, however, can be indicative of a souring macroeconomic trend.”