US Recession: Jobs Data and Economic Outlook Under Scrutiny
Understanding the Signs of a US Recession
The US economy is currently showing two major indicators pointing towards a looming recession. After recent jobs data revealed an uptick in unemployment, analysts are growing increasingly concerned. The Sahm Rule has been triggered, indicating a potential downturn could be on the horizon.
Key Indicator: The Sahm Rule
- This rule is activated when the three-month average of the US unemployment rate exceeds the lowest rate from the past year by 0.5 percentage points.
- Historically, this has proven to be a reliable predictor of recessions in the US since 1949.
Widening Gaps in the Treasury Yield Curve
Concerns are further amplified by the inverted Treasury yield curve, which has persisted for over two years. Short-term bond yields being higher than long-term indicates investor doubt about the economic outlook.
Experts Weigh in on Recession Likelihood
- JP Morgan estimates a 35% chance of a US recession starting before the end of 2024.
- The overall odds remain at 45% for a recession by the end of 2025.
- Contrasting views exist, with some economists believing the forecasts could be overstated.
While job demands are fluctuating, overall activity is showing gains led by the service sector, which brings some positivity amidst troubling signs.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.