The Unemployment Rate rose to a new recent high of 4.0% on Friday (red dot in chart below.) Notice that when this rate makes a low and then begins to rise up (curl), a recession (gray vertical bars) is nearby. The Unemployment Rate has now risen 0.6%, creating a definitive curl where the soft-landings of 1967, 1984, and 1995 don’t have anything looking like this. The Unemployment Rate rose a maximum of 0.3% from the nearby low in those soft-landings.

This dynamic is what the Sahm rule is based on. It states that when the 3-month average Unemployment Rate rises 0.5% from its recent 12-month low, that a recession has begun. It has worked for all recessions since 1950 except one false-positive in 1959. This rule hasn’t quite triggered yet but is 73% of the way.

With the relationship above, the inverted yield curve, and the Leading Economic Index being 14% below its peak, a recession is almost certainly coming, it has just taken a long time to materialize.