Source: Bureau of Labor Statistics / Claudia Sahm via FRED
Data through: August 2026 · updated Sep 4 · Updates: Monthly (updated with BLS jobs report)
MThe three bars show the last 3 months (end-of-month values) 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 41th 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.
Grey areas = NBER recessions · Scroll to read · zoom and pan in Expand
Monthly values
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
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
Apr 2026
0.13
Healthy reading
Mar 2026
0.20
Within normal range
Month-end readings of the same series the chart shows, from sahm_rule. 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 at or near the beginning of every US recession since 1970 — giving it a perfect historical track record.
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 each indicator based on historically significant thresholds:
Near trigger — historically very close to recession onset
Above 0.5
Rule triggered — recession underway per historical track record
Historical Extremes — What Happened Next?
When this indicator reaches extreme levels, history shows consistent patterns:
April 2020COVID-19 unemployment spike
11.13
The Sahm Rule indicator surged to 11.13 during the COVID shock — far exceeding the 0.50 recession trigger — as unemployment spiked from 3.5% to 14.7% in two months. This was the sharpest single move in the series history.
July 2024Near-trigger during Fed hiking aftermath
0.39
The Sahm Rule approached but did not cross the 0.50 recession trigger in mid-2024, as unemployment rose from 3.4% to 4.3%. The Fed subsequently pivoted to rate cuts. The indicator retreated without confirming a recession.
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 held at 3.5% with no meaningful deterioration, confirming the expansion was still intact before COVID disrupted it.
Investor Checklist — Current Reading
Based on the current Sahm Rule reading of -0.07 (Very Positive):
✓No recession signal — labor market healthy, maintain equity exposure
ℹMonitor monthly as unemployment data updates — the trigger can arrive quickly
Frequently Asked Questions
What exactly is the Sahm Rule calculation?
Sahm Rule value = (3-month average of current unemployment rate) - (minimum of the 12-month averages of the unemployment rate over the prior year). 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?
Through 2023, the Sahm Rule had never given a false positive — every trigger occurred during an actual recession. The July 2024 trigger was the most controversial: Claudia Sahm herself suggested unusual labor supply growth (immigration-driven) may have temporarily elevated the unemployment rate without reflecting genuine economic weakness. The rule's perfect record makes this ambiguous reading particularly notable.
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.
If the Sahm Rule triggers, is it too late to sell?
Not necessarily — the Sahm Rule triggers near recession onset, but recessions and bear markets can last 6-18 months after onset. The 2008 recession began in December 2007 and the S&P 500 continued falling until March 2009. However, timing the exact trigger for defensive positioning is difficult. Most analysts use the Sahm Rule as one of several signals in a framework rather than a single binary switch.