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A corollary to the Sahm rule

With the unemployment rate rising, the Sahm rule will probably be triggered soon. That will prompt claims a recession has started but, since that rise is due to increased labour supply as much as it is weaker demand, we would caution against relying on that indicator. We propose a corollary to the Sahm rule, based on the employment-to-population ratio, which suggests the economy is not in imminent danger.

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