Analysis of current economic conditions and policy
February 2024 Real-Time Sahm Rule Indicator
Still below threshold:
Figure 1: Real time Sahm rule indicator (blue), and 0.5% threshold (red dashed). NBER defined after peak to trough recession dates shaded gray. Source: FRED, NBER.
4 thoughts on “February 2024 Real-Time Sahm Rule Indicator”
Macroduck
But you know some right-wing talking head will claim the Sahm rule says we’re in recession.
More from today’s report – The payroll index, a combination of employment, hours and hourly wages, rose 0.6% in February, a bit faster than the average for 2023. That’s plenty to keep spending going. The payroll index is a reasonable proxy for personal income except when there are big swings in government transfers:
Revisions to job gains were once again downward, a fairly consistent pattern recently. Even so, the monthly average gain over the past 12 months is 230,000 and for the past 3 months is 265,000.
The rise in the jobless rate came despite a report of 334,000 new jobs from households. The jobless rate rise was all among women and teens.
Hiring diffusion indices, both overall and manufacturing, we’re at recent highs – lots of industries added jobs. That’s despite an overall drop in factory employment of 2,000.
By the way, ADP reported 140,000 new private sector jobs in February, compared to 223,000 in BLS data. ADP also reported that “pay gains for job-changers accelerated for the first time in more than a year, rising to 7.6 percent from 7.2 percent.” In case anyone tries to pretend that changing jobs doesn’t increase wages on average.
Macroduck
In addition to right-wing cranks misinterpreting the Sahm rule, we occasionally hear complaints about the BLS business birth/death model adding lots of jobs. Often, those critics compare the birth/death adjustment to the seasonally adjusted monthly job change. Bad idea, since the adjustment is added to or subtracted from the non-seasonally adjusted number before seasonal adjustment. In February, the model accounted for 13% of the gain in total employment before seasonal adjustment after subtracting 4% in January.
As I’ve noted before, new buiness applications suggest that a big add from the birth/death model makes sense. New business applications were 56% higher in 2023 than in 2019 and “high propensity” applications were up 22% from 2019. Both overall and high propensity applications have been considerably higher every year in the 2020-2023 period than in any previous year. Meanwhile, business bankruptcies have not been similarly elevated.
Macroduck
Apologies. I earlier wrote that households reported an increase in jobs. They reported a loss of 184,000 jobs. Must be getting rusty.
But you know some right-wing talking head will claim the Sahm rule says we’re in recession.
More from today’s report – The payroll index, a combination of employment, hours and hourly wages, rose 0.6% in February, a bit faster than the average for 2023. That’s plenty to keep spending going. The payroll index is a reasonable proxy for personal income except when there are big swings in government transfers:
https://fred.stlouisfed.org/graph/?g=1i1L9
Revisions to job gains were once again downward, a fairly consistent pattern recently. Even so, the monthly average gain over the past 12 months is 230,000 and for the past 3 months is 265,000.
The rise in the jobless rate came despite a report of 334,000 new jobs from households. The jobless rate rise was all among women and teens.
Hiring diffusion indices, both overall and manufacturing, we’re at recent highs – lots of industries added jobs. That’s despite an overall drop in factory employment of 2,000.
By the way, ADP reported 140,000 new private sector jobs in February, compared to 223,000 in BLS data. ADP also reported that “pay gains for job-changers accelerated for the first time in more than a year, rising to 7.6 percent from 7.2 percent.” In case anyone tries to pretend that changing jobs doesn’t increase wages on average.
In addition to right-wing cranks misinterpreting the Sahm rule, we occasionally hear complaints about the BLS business birth/death model adding lots of jobs. Often, those critics compare the birth/death adjustment to the seasonally adjusted monthly job change. Bad idea, since the adjustment is added to or subtracted from the non-seasonally adjusted number before seasonal adjustment. In February, the model accounted for 13% of the gain in total employment before seasonal adjustment after subtracting 4% in January.
As I’ve noted before, new buiness applications suggest that a big add from the birth/death model makes sense. New business applications were 56% higher in 2023 than in 2019 and “high propensity” applications were up 22% from 2019. Both overall and high propensity applications have been considerably higher every year in the 2020-2023 period than in any previous year. Meanwhile, business bankruptcies have not been similarly elevated.
Apologies. I earlier wrote that households reported an increase in jobs. They reported a loss of 184,000 jobs. Must be getting rusty.
Heh, not hardly.