SOS! Signaling Recessions Earlier

John O'Trakoun and Adam Scavette

Richmond Fed Economic Brief, 2025, vol. 25, issue 7

Abstract: For consumers of economic data navigating an overgrown jungle of economic facts, figures and statistics, leveraging simple statistical regularities can be useful in tracking important changes in the momentum of the economy. For example, many economic analysts interpret two consecutive quarterly declines in gross domestic product (GDP) as an indicator of recession, even though the National Bureau of Economic Research (NBER) uses several other indicators to determine official recession start and end dates. Another very popular recession indicator is the Sahm rule, which signals the start of a recession when the three-month moving average of the unemployment rate rises by at least 0.5 percentage points relative to its minimum over the previous 12 months.

Keywords: recession; unemployment (search for similar items in EconPapers)
Date: 2025
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