Rising Unemployment Rates Signal Potential Recession in 20 States, Economists Warn

By Eleanor Harrison Mar27,2024
Cease Utilizing the Sahm Rule Recession Indicator for States

The United States has been on a “recession warning” for the past two years, and despite a brief period of calm at the beginning of 2024, the alarms are once again sounding. This time, the concerns are not related to the usual indicators such as an inverted Treasury market yield curve or low consumer and business sentiment. Instead, some economists are pointing to rising unemployment rates in several states as a sign that a recession may be looming or already here.

The warning is based on a simple recession indicator known as the Sahm rule, which was developed by an economist. The rule is straightforward: 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.

In recent years, many factors have contributed to this economic downturn, including global trade tensions and political instability. However, it’s important to note that while these factors have certainly affected job growth and employment rates across different sectors and regions, they don’t necessarily mean we’re headed into a full-blown recession.

Instead, some economists are warning about what they call “stagflation,” which would combine elements of both inflation and stagnation. This scenario could lead to higher prices without significant economic growth, making it difficult for businesses and individuals alike to keep up with rising costs.

As such, policymakers must carefully monitor economic conditions and take appropriate action to avoid a prolonged slowdown or even another financial crisis.

Overall, while there are certainly signs indicating we may be heading towards another recession or stagflationary period

By Eleanor Harrison

As a content writer at newseasoning.com, I infuse flavor into words, crafting compelling stories that captivate and inform our audience. With a keen eye for detail and a passion for creativity, I strive to create content that not only engages but also inspires. Whether I'm concocting a savory blog post or whipping up a spicy product description, I pour my heart and soul into every piece I write. Join me on this flavorful journey as we explore the tantalizing world of content creation together.

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