US labor-market conditions barely changed between October and November. The labor market is in the vicinity of full employment, with a recession probability of 28%.
The Sahm rule has untriggered which I interpret as a false positive. Your recession indicator triggered in the spring of 2024 and you have pointed out it has not ad any false positives. I think this means a value of .3 has always lead to a .8. How long has the average that "trip" taken and how variable has that length of time been? Lastly, the Sahm rule and your indicator are not causal, are there any recession signal tat are more grounded in economic theory that you follow? I enjoy your new letter, TY! KTR
You're right that these are statistical indicators, although of course they are consistent with our models (in the models, a recession does trigger a drop in vacancies and an increase in unemployment). I am not aware of more theory-based indicators—I am not sure there are any. I also do not know the average length of the trip from 0.3 to 0.8, but this is a great statistic to have. I will compute it and report back.
The Sahm rule has untriggered which I interpret as a false positive. Your recession indicator triggered in the spring of 2024 and you have pointed out it has not ad any false positives. I think this means a value of .3 has always lead to a .8. How long has the average that "trip" taken and how variable has that length of time been? Lastly, the Sahm rule and your indicator are not causal, are there any recession signal tat are more grounded in economic theory that you follow? I enjoy your new letter, TY! KTR
You're right that these are statistical indicators, although of course they are consistent with our models (in the models, a recession does trigger a drop in vacancies and an increase in unemployment). I am not aware of more theory-based indicators—I am not sure there are any. I also do not know the average length of the trip from 0.3 to 0.8, but this is a great statistic to have. I will compute it and report back.