Data through: October 2026 · updated Nov 6 · Updates: Monthly · Next: Dec 4
MThe three bars show the last 3 months for this indicator, oldest left to newest right. Bar height reflects each reading relative to the other two — the tallest is the highest of the three, the shortest the lowest.
Historical context: Currently in the 33rd percentile of all historical readings.
What this means right now: The Sahm Rule is well below the trigger threshold — unemployment has not risen enough from recent lows to signal recession. The labor market is stable and healthy.
Sahm Rule Recession Indicator — the last 12 months
Every month's reading, with the band the heatmap gives it. The chart above shows the same series in full.
Month
Value
Band
Oct 2026
0.00
Very strong reading
Sep 2026
0.00
Very strong reading
Aug 2026
−0.07
Very strong reading
Jul 2026
−0.03
Very strong reading
Jun 2026
0.07
Very strong reading
May 2026
0.10
Healthy reading
Month-end readings of the same series as the chart. Values are the current record, not point-in-time: a month that has since been revised shows its revised value.
What is the Sahm Rule?
The Sahm Rule, developed by economist Claudia Sahm, is a real-time recession indicator based on unemployment data. It triggers when the three-month moving average of the national unemployment rate rises by 0.5 percentage points or more relative to its low during the previous 12 months. The rule has triggered within three months of the start of all nine recessions from 1960 to 2020, and twice without one through September 2026 (November 1976 and July 2024).
Unlike most economic indicators that confirm recessions long after they begin, the Sahm Rule is designed to identify recession onset in real-time using timely monthly unemployment data. Claudia Sahm designed it to be a simple, reliable trigger for automatic fiscal stimulus. When the rule triggers, it signals that the labor market has deteriorated sufficiently to classify as a recession, regardless of what GDP data (which arrives much later) shows.
How We Color-Code the Sahm Rule
Our heatmap colors this indicator against historically significant thresholds:
Below 0.10
No recession signal — the three-month average unemployment rate is at or near its 12-month low
0.10 – 0.20
Slight rise from the 12-month low — not a signal
0.20 – 0.30
Elevated — unemployment has risen meaningfully from its low; the rule has not triggered
0.30 – 0.50
Approaching the trigger — on 9 of the 20 crossings of 0.30 since 1960 a recession was under way or began within three months. Readings of 0.40–0.50 were reached without a trigger in 1967, 2003 and 2025, and none was followed by a recession
0.50 or above
Rule triggered — a recession was under way or began within three months on 11 of 13 triggers since 1960
Historical Extremes — What Happened Next?
When this indicator reaches extreme levels, history shows consistent patterns:
June 2020COVID-19 unemployment spike
9.50
The Sahm Rule peaked at 9.50 in June 2020 — far above the 0.50 trigger — after unemployment jumped from 3.5% in February to 14.8% in April 2020. The rule had triggered in April, at 4.00, one month after the recession began. This was the sharpest move in the series history.
July 2024Trigger without a recession
0.53
The Sahm Rule was at or above the 0.50 trigger for three months — 0.53 in July, 0.57 in August and 0.50 in September 2024 — as unemployment rose from 3.4% in April 2023 to 4.2%. The Fed subsequently pivoted to rate cuts. No recession followed: the second false alarm in the series from 1960 to September 2026, after a single month at 0.50 in November 1976.
2019Pre-pandemic labor market strength
0.00
The Sahm Rule read near zero throughout 2019 — one of the tightest labor markets in 50 years. Unemployment fell to 3.5% by September with no meaningful deterioration, confirming the expansion was still intact before COVID disrupted it.
Frequently Asked Questions
What exactly is the Sahm Rule calculation?
Sahm Rule value = (3-month average of the unemployment rate) − (the lowest 3-month average of the prior 12 months). When this value reaches 0.5 or above, the rule has triggered. It measures not just the level of unemployment but the pace of increase — a rapid rise from a low point signals recession regardless of the absolute level.
Has the Sahm Rule ever given a false positive?
Twice since 1960. In November 1976 the rule read exactly 0.50 for a single month (0.43 in October, 0.47 in December) with no recession. In July 2024 it triggered for three months — 0.53, 0.57 and 0.50 — and again no recession followed. The other 11 triggers since 1960 came with a recession under way or beginning within three months.
Who is Claudia Sahm and why did she create this rule?
Claudia Sahm is a macroeconomist who worked at the Federal Reserve Board. She created the rule while developing proposals for automatic fiscal stabilizers — government programs that would automatically deploy stimulus when the economy deteriorates, without requiring Congressional action. The rule was designed to be simple, timely, and reliable for triggering such automatic responses.
How is the Sahm Rule different from the traditional "two consecutive quarters of negative GDP" recession definition?
GDP-based recession identification is slow — GDP data arrives 1-2 months after each quarter ends, and official recession dating by NBER can take months or years. The Sahm Rule uses monthly unemployment data (available within 2 weeks of month end) to identify recession onset in near-real-time. It is a practical tool for fast response, not an academic definition.
How long after a Sahm Rule trigger have recessions and market declines continued?
The trigger comes near the start of a recession, not its end. In each of the nine recessions from 1960 to 2020, the rule first triggered within three months of the start. The recession then ran on for a median of 6 more months. That ranged from 1 month in 2020 to 15 in 2008–09. The 2008 recession began in January 2008. The rule triggered with the April 2008 reading of 0.50, published on May 2, 2008. The S&P 500 then fell a further 52%, from 1,414 that day to 677 on March 9, 2009.