My friend just lost her job last night. She has four children, no husband, and just got a loan for a house a year ago. And now she’s on zero income.
I’m scared, I’m genuinely scared for her.
I can’t even imagine what she must be going through, although she described it to me in vivid detail, while bawling uncontrollably, invoking images of sleeping under bridges and prostitution for cans of beans.
But imagining it is one thing, and living it is another.
Those of us who are just thinking about it are watching the stock market and interest rates, but there’s another number quietly climbing in the background of 2026’s economic noise.
That number is the unemployment rate — specifically, how fast it’s moving.
According to an indicator developed by former Federal Reserve economist Claudia Sahm, when that rate’s three-month moving average rises by 0.50 percentage points or more relative to its low during the previous 12 months, a recession has historically already begun. (Current Market Valuation)
The Sahm Rule is pattern recognition, distilled into a single, devastatingly simple formula.
In all 11 recessions since 1950, the Sahm Rule triggered during every single one, on average about three months into the downturn — well before the National Bureau of Economic Research officially declares anything, and before GDP data makes the picture clear.
That’s a near-perfect track record.
Across seven decades of booms, busts, oil shocks, dot-com crashes, and a global pandemic, this one metric has been there, flashing the warning sign first.
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