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.
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.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.