The Sahm Rule, an indicator that has signaled every U.S. recession since 1949, flashed red in July amid a weaker jobs report. Created in 2019 by economist Claudia Sahm, the rule states that when the three-month average U.S. unemployment rate increases by 0.5 percentage points from the 12-month low, the U.S. is already in a recession. Yet, this signal may be overstated due to the unique labor market dynamics being seen today.

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