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Claudia Sahm, creator of the Sahm Rule recession indicator, discusses why her own indicator triggered in mid-2024. She argues this time may be different due to immigration-driven labor supply expansion rather than demand collapse.
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Canon
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Sahm argues that the post-pandemic immigration surge changed the structure of the labor market itself, altering what unemployment data means. The environment (open borders) shaped the behavior (job-seeking by new entrants) that triggered the indicator.
Highlights
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Even the creator of the Sahm Rule says context matters more than the indicator itself
Sahm explains that the unemployment rate rose not because of mass layoffs but because immigration expanded the labor force. Her own rule triggered, but she argues the underlying mechanism is different from prior recessions.Was this useful?