From CNBC: 2024-08-07 01:12:24

Claudia Sahm, chief economist at New Century Advisors, believes the U.S. Federal Reserve does not need to make an emergency rate cut, but supports a 50-basis-point cut to ease restrictive monetary policy. A recession could be looming, with manufacturing data and rising unemployment fueling fears in global markets. Sahm’s “Sahm rule” predicts a recession when the unemployment rate is 0.5% above its low.

Although the U.S. is not currently in a recession, Sahm warns of potential economic weakening. To prevent recession, the labor market must stabilize, and growth must level out. The U.S. employment rate stands at 4.3%, crossing the 0.5% threshold for recession indicators. The economy’s future remains uncertain, with further weakening possibly leading to a recession.

Read more: Sahm rule creator doesn’t think that the Fed needs an emergency rate cut