Sahm Rule Vs. FED's Own Recession Probability Indicator

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There is an interesting divergence between Claudia Sahm's real-time recession indicator and the FED's own recession probability indicator.

Historically, if we look at this chart, we get a rise in both together into a recession.

This time, the Sahm-Rule recession indicator has tripped the threshold at which recessions usually occur, but without a corresponding rise in the FED's recession indicator.

So, I believe one of two scenarios will play out here.

Either:

A - The FED's recession indicator will "correct" to meet the Sahm rule indicator's action and trip it's own recession threshold thus confirming the recession.

B - The Sahm rule is incorrect here and will correct back down - thus disconfirming the recession - to meet the FED's own indicator.

I believe by watching this spread and how it resolves, we may get an insight into where the economy is going.

Feragatname

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