Sahm rule

The Sahm rule is a heuristic used to identify in real time when the United States economy has entered a recession, developed by economist Claudia Sahm, formerly of the Federal Reserve and the Council of Economic Advisors, as part of her research on fiscal policy responses to recessions. It triggers when the three month moving average of the national unemployment rate rises by 0.50 percentage points or more above its low point over the prior twelve months, a design that automatically adjusts for changes in the underlying natural rate of unemployment without relying on a fixed threshold. The rule is intended to flag the early stages of a recession rather than to forecast one in advance, and it has been unusually accurate historically, producing only two false positives since 1959. This description is adapted from Wikipedia contributors under CC BY-SA 4.0; changes were made. https://creativecommons.org/licenses/by-sa/4.0/