Recent vs. 2008 and 2001 recessions.
In the 2001 and 2008 recessions, the Sahm Rule (real time) threshold is passed when unemployment is rising mostly due to rising unemployment count (and not due to rising labor force). Figures 1 and 2 show the real time Sahm Rule measure (black line) vs. decomposition of contributions to change in unemployment rate.
Figure 1: Real time Sahm rule indicator (black, left scale), and contributions to change in unemployment rate, from increased labor force (blue bar, right scale), from greater number of unemployed (brown bar, right scale), all in percentage points. NBER defined month-after-peak to trough recession dates shaded gray. Source: FRED, BLS via FRED, NBER, and author’s calculations.
Figure 2: Real time Sahm rule indicator (black, left scale), and contributions to change in unemployment rate, from increased labor force (blue bar, right scale), from greater number of unemployed (brown bar, right scale), all in percentage points. NBER defined month-after-peak to trough recession dates shaded gray. Source: FRED, BLS via FRED, NBER, and author’s calculations.
Compare against the most recent breach of the threshold:
Figure 3: Real time Sahm rule indicator (black, left scale), and contributions to change in unemployment rate, from increased labor force (blue bar, right scale), from greater number of unemployed (brown bar, right scale), all in percentage points. Source: FRED, BLS via FRED, and author’s calculations.
The contribution from labor force growth is outsized in this episode, which is partly what Dr. Sahm was referring to (Yahoo finance):
“This time really could be different,” Sahm said. “[The Sahm Rule] may not tell us what it’s told us in the past, because of these swings from labor shortages, with people dropping out of the labor force, to now having immigrants coming lately. That all can show up in changes in the unemployment rate, which is the core of the Sahm Rule.”
“The contribution from labor force growth is outsized in this episode”
I’ve been saying this for a while. But it is concerning that the employment to population ratio has slipped back to 60.0%. Cut interest rates NOW!
I must be misunderstanding how the threshold is calculated. The lowest 3 months in the last 12 are all 3.7%. And the most recent 3 months average 4.13%. How is the threshold calculated?
Thanks!
Bill,
I suspect it’s the base period that’s tripping you up. The year-ago 3-month average includes May and June of 2023, as well as July. That’s (3.4%+3.5%+3.4%)/3.
Coalition of Republicans to join Vice President Harris on the campaign trail
https://www.msn.com/en-us/news/politics/coalition-of-republicans-to-join-vice-president-harris-on-the-campaign-trail/ar-AA1odhrI?ocid=msedgdhp&pc=U531&cvid=0e3a3a00180946f1869d8c869b2b37bd&ei=32
Any Republican who cares about our democracy and our Constitution should join these guys.
Elegant presentation. Fits with what pgl, Sahm and, if memory serves, New Deal Democrat have been pointing out.
In addition, Sahm’s rule is not NBER’s rule. The suite of data which you regularly present is what NBER looks at, for good reason. There data don’t, for now, suggest recession.
Sahm’s idea is to allow policy makers to confront a weakening economy before the data, and data revisions, are available. It allows erring in the right direction when we don’t have full information. The Fed has so far failed to do that. He Fed’s job is to balance risks, so while we may take comfort from your presentation, the Fed should not.
Byron Donalds spars with ABC host over questions about Harris’ racial identity
https://www.politico.com/news/2024/08/04/byron-donalds-trump-harris-racial-identity-00172569
So black Congressman aka Trump’s shoeshine boy questions over and over Kamala Harris’s racial identity. Yes Harris is bi-racial but so are Donald’s 3 sons since their mother is a white woman. Or does Byron tell his three sons they are white as Byron certainly acts as if he is a loyal member of the KKK.
I think the word Kamala Harris and her staff are searching for but apparently can’t find is COWARD
https://www.msnbc.com/rachel-maddow-show/maddowblog/duckin-don-team-harris-ridicules-trump-new-debate-dodge-2024-election-rcna164227
“Duckin’ ” is not a word Republicans would use. Quit trying to be cutesy using alliteration~~~go for the jugular. This is why Democrats often lose fights they should win. They fight like a middle school child trying to impress his honors English teacher. Fight like an adult. The orange man is a coward—therefor call him out as a coward.
Hey Moses!
I suspect what Team Harris is trying to do is to ridicule while they insult. “Duckin'” is meant to be cute, to show they think Trump isn’t threatening to them. But yeah, he’s a coward.
Harris has implied cowardice pretty clearly: “It’s interesting how ‘any time, any place’ becomes ‘one specific time, one specific safe space.'”
Trump has decided he only wants to debate Harris if faux news moderates. Faux has offered September 4 as the date. Harris has now said she’s going to show up for the NBC-moderated debate on September 10, “as he agreed to.” So it’s shaping up to be two solo performances, nearly a week apart.
I don’t see how Trump, in his present state of mind, helps himself with prolonged, unedited exposure. Harris has to worry that a long speech, without the drama of debate, becomes boring but she doesn’t have to worry that she’ll offend the people she’s trying to sway.
“if you got something to say, say it to my face”.
Now that’s pretty good!
The Democrat nominee can manage to label low income, low-educated whites “deplorables” right to their face and on a national camera, but Democrats cannot spit out calling donald trump a coward and then they wonder why all those poor whites run to the Reagan-types and trump types. Gee I wonder??
Use very harsh words to describe your own potential electorate, then soft soap your felon opponent. “Don’t duck challnges, you naughty naughty boy”. What’s next??~~is Kamala going to tell trump no playing on Twitter until he finishes his ice cream cone treat?? Why would that be a losing strategy I wonder?? Did you want to email Hillary and ask her how that one works and if we should do a video replay?? Maybe Kamala can fake health problems and an Arkansas accent, and have two flunkies carry her to a van??
https://www.wired.com/2016/09/making-hillary-clintons-unwanted-viral-video/
https://www.merriam-webster.com/thesaurus/coward
I was looking over this list. Gutless came to mind but then the DONALD has an enormous gut.
I’ve been looking and it seems the Democrats have been calling Trump a coward quite a lot. No less than David Plouffe tweeted this over the weekend. Now if your point is that we should screaming this often and loudly – I agree 100%!
“The Associated Press in November 2016 wrote of Harris: “Harris will enter the chamber as the first Indian woman elected to a Senate seat and the second black woman, following Carol Moseley Braun, who served a single term after being elected in 1992,” referencing the former Illinois senator.”
I just watched the interview with Byron Uncle Tom Douglas and he twice claimed AP said Harrish was Indian never mentioning she was also black. He challenged people to go to the internet. Well people are and those people now know Douglas blatantly lied here. But hey Trump gave him an extra quarter for shining those shoes!
Its a great distraction that will not win Trump any more votes. The more days and news cycle that ticks away with stupid stuff, the better. A lot more voters will move towards her because her racial identity is being questioned, than will move away from her, because she is “not black enough”. The talk about “black jobs” lost Trump more votes than he can ever dream of winning from Kamala not “being black enough”. Simone Biles posted “I love my black job” – that pretty much sums up how well his pathetic racism flies with black voters.
I can’t find the best writing I’ve seen on this whole “Kamala Harris isn’t black” issue. My bad.
It opened with a cab driver from Africa asking the author about his racial background. Author says “I’m black”. Driver says “No, you’re not”. After a little more discussion, the driver asks how the author looks like he does if he’s black. The author’s answer is “Slavery”.
Miscegenation over the centuries has meant that very few descendants of Africans in the U.S. “look” African (ignoring that we are all descendants of Africans). Most descendants of Norwegians in the U.S. aren’t “pure” Norwegian, nor Irish pure Irish, but the Norwegians still go ice fishing and the Irish still get extra kisses on March 17.
Who is Trump, or any other racist scum, to tell black folks they aren’t black?
It’s unfortunate that racial identity is the wedge Trump wants to drive right now – we’ve had quite enough of that over the years. It’s also a sign that he knows he’s losing, and can’t figure out what to do about it.
Guess who has bi-racial children? First of all J D. Vance. Secondly Byron Uncle Tom Donalds. I wonder WTF these two tell their kids?
Sometimes it looks like its not just that he doesn’t know what to do – he often seem to not know what he is doing. He keeps drumming up a base that doesn’t need drumming up and in the process alienating groups he needs to win over. He goes off manuscript and makes sure that the central theme of his talk is drowning out from coverage because of something stupid he just can’t stop himself from saying. Why would he attack and ridicule a popular GOP governor in Georgia about something that is in the past. No upside but a lot of downside to that. He is going senile.
Off topic – fun article about Cold War espionage:
https://www.politico.com/news/magazine/2024/08/04/us-spies-soviet-technology-00164126
How we fed bad tech to Russian tech bandits. All cloaks, no daggers.
Of course, Pootie Poot was in the spy business back then, and this makes his guys look bad. Not that our guys would ever be cynical in timing the publication of a story like this.
“an FBI agent in his 30s named Rick Smith walked into the Balboa Café, an ornate, historic watering hole in San Francisco’s leafy Cow Hollow neighborhood.”
I used to live near there. Know that cafe well. Who knew?
Off topic – the carbon-capture scam:
https://www.vox.com/climate/363076/climate-change-solution-shell-exxon-mobil-carbon-capture
There is a real tension in this issue. In the one hand, the fossil fuel industry has promoted carbon capture as a way to reduce CO2 emissions without having to reduce fossil fuel combustion – or hurt their profits. It’s a happy fantasy that will get out descendants killed and immiserated in vast numbers.
On the other hand, the path we are on is so disastrous that any effort to improve the outcome is worth a look.
Critical to decisions about carbon capture is full greenhouse gas accounting, including for extraction, transportation, storage and processing, construction and decommission, as well as leakage every step of the way. Leakage is a massive factor. Industry figures routinely show only the balance at the smokestack, which is a complete crock.
So carbon capture is probably a crock, too, but we can’t afford to dismiss it without complete cradle-to-grace greenhouse gas – and other environmental – accounting.
Off topic – a dose of Chinese policy stuff:
Is China pivoting from support for Russia to seekung amity with rich democracies? Simplistic and speculative, but worth some thought:
https://asiatimes.com/2024/08/china-needs-to-pick-a-side-and-it-just-might-pick-the-west/
The author argues that China is going to have to come off the fence between enabling Russia and getting along with the rich democracies. His evidence for a shift being underway now is thin. (Pandas? Really?) Let’s remember, Chinese bombers have recently joined Russian bombers in testing U.S. air defenses. That’s not how you climb off the fence in our direction. Toward India, yes, there clear movement. Toward the rest of us? Not obvious. But China’s economy just keeps staggering, and building up ruble reserves isn’t going to help.
On the subject of the economy, Michael Pettis is out with a new piece which points out the difficulty in boosting household consumption, which strongly implies weak Chinese growth ahead:
https://carnegieendowment.org/posts/2024/07/why-is-it-so-hard-for-china-to-boost-domestic-demand?lang=en
The key point to what Pettis writes is simple. Chinese households have subsidized growth in the sectors which have led growth, so boosting household consumption would come at the cost of growth elsewhere.
Pettis suggests a gradual transition, which makes obvious good sense. He notes that even a gradual, well-managed transition toward an increased share for households could mean slower growth during the transition. Transferring resources from one sector to another leads to a falling away from the production possibility frontier, blah, blah, blah. However, there is a good chance China is already inside the PPF, given high unemployment and low returns on investment, so maybe the cost of transition would be low, in aggregate. Of particular importance, more loans would go bad, while household saving might decrease.
There is political issue which is strongly implied by the removal of subsidy from till-now favored sectors of the economy – those who have grown rich in the leading sectors would lose their subsidy. There are so many of them, including in the military and the Party, that this could be risky for Xi.
OK, Professor Chinn, I’ll stop now.
Do we know how much of this change is due to revisions vs what the data looked like in real time? Saying employment is strong now….when it could just be revised away like it was it all past downturns?
Yes, it could. The household survey suggests payroll job gains will be revised away. ADP data suggest it won’t be. Helpful, right?
Here’s the picture:
https://fred.stlouisfed.org/graph/?g=1rfsZ
Keep in mind, ADP is an actual count, not a survey.
Do we know how much of this change is due to revisions vs what the data looked like in real time? Saying employment is strong now….when it could just be revised away like it was it all past downturns?
Could go the other way as well. Bank inflation doesn’t support your point and yup, that is the leading indicator. This inflation is on the low end, which is why people are missing it. The distortion between household employment survey and prime age lfpr is historically noticeable.
Only our newest troll would compare “bank inflation” (must be a Princeton Steve made up term) to employment.
Can’t find “bank inflation” at FRED. Or at Investopedia. Or in my money and banking text. Maybe it’s one of those MMT thingies.
Looks like household employment would have grown by 75,000+ without Beryl. Enough said. Off to September and snap back city.
Nothing weird/odd about this guy. Surprised Hillary Clinton didn’t try for the hail mary and choose this guy as her VP in 2016.
https://www.cnn.com/2024/08/04/politics/rfk-jr-bear-central-park/index.html
Would have fit Hillary’s political acumen to about a twentieth of one millimeter.
“RFK Jr. says he placed a dead bear cub in Central Park 10 years ago”
I used to run in Central Park most mornings until I moved to Brooklyn in 2013. I saw a couple of raccoons but never any bears. If RFK Jr. thought people would believe the bear cub died there – he is nuttier than we given him credit for.
I haven’t seen McBride predicting recession yet. In fact, I haven’t seen him weigh in at all, but then I haven’t been paying close attention to his blog recently.