Claudia Sahm (of the Sahm Rule) Speaks Out

Claudia Sahm (of the Sahm Rule) Speaks Out

“The US labor market is not firing on all cylinders.”

Economist Claudia Sahm is now famous for her recession-indicating Sahm Rule – and she’s concerned about the US labor market. While Claudia doesn’t think we’re headed for a recession, she does see the US economy starting to slip. 

But what I respect tremendously about Claudia is that despite the Sahm Rule’s fame (Claudia is all over the news these days), she hasn’t let it get to her head – in fact, she’s been talking it down in the media, saying it’s just a simple heuristic that doesn’t work all the time. (If you missed my BBAE Blog piece about it, the Sahm Rule indicates a recession when the unemployment rate rises 50 basis points – half a percentage point – above its trailing 12-month low; in other words, when unemployment suddenly spikes, a recession is likely happening.)

But unlike arguably most economic “prophets,” Claudia hasn’t let fame go to her head: She says that more workers entering or re-entering the workforce has thrown the Sahm Rule off, and for a good reason. 

In this chat, we discuss why Claudia worries about the US economy – and hopes for a 50 basis point cut – the Sahm Rule and its logic, and how the world can get more women into economics (a subject that punches far below its weight in terms of female involvement).
Click here or the image below to watch:

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