This "rule" only triggers before a recession 

America is currently plagued by the hydra-headed evil duo of inflation and recession. The worst part about this recession is that consumers are racking up credit card debt. In April alone, credit card debt went up 20% while rates have doubled in a year. Inflation is so high that consumers are literally taking debt for basic life necessities. Collapse has indeed begun..

It surprises me why everybody gets really worked up about recession and inflation data. Inflation has always existed, and people have been using investments to beat the inflation. The stock market return, for example, always beats inflation. I heard of someone who invested $121k last October, and has grown the portfolio by more than $400k. I need recommendations that can give me similar return.

Recessions are an unavoidable part of the economic cycle; all you can do is prepare for them and plan accordingly. I graduated into a slump (2009). My first job after graduating from college was as an aerial acrobat on cruise ships. Today, I work as a VP for a global corporation, own three rental properties, invest in stocks and businesses, run my own company, and have increased my net worth by $500k in the last four years.

I think one extremely important question to ask and answer is: How many times has the SAHM rule crossed the 0.19 early warning level, but failed to reach the 0.5 recession indicator?

We experienced the peak of our era, and now it is gone. Recession is tanking everything including 401K. My retirement equities portfolio of $750K is in the reds. I keep losing because of inflation. This world will fall to the corrupt rulers in the same way that Rome did. I'm sorry if you're thinking about retiring and you're worried that your pension won't be enough to meet the rising cost of living. Horrible foreign policies everywhere, bad regulatory policy, bad fiscal policy, and bad energy policy.

First rule: when you are looking for recession, it never comes by! Second rule: when you are tired of looking for recession and lost out on a good nice bull run and start having an fomo(fear of missing out) on further highs prompting you to go all in that's the day recession will start for you! 💀🤷‍♂️😂

Your videos talk about the coming recession every few months. If you predict a recession that often, you're bound to be right at some point.

So, looking at the Sahm Rule indicator, we can see where, in October it was at a 0.33 and then dropped sharply to a 0.30 in November. This same thing happened in 1986 before we moved into a period of strong economic growth that lasted for 4 years. There are small spikes like this, really little more than tiny bumps, in the Sahm going back to the 1960's. In fact, the Sahm can reach a highpoint of 0.43 before declining again and no recession occur. Just be mindful when presenting information like this that you also present information that counters your argument. There are a lot of people who can be easily influenced by this information and they don't always do their own research or technical analysis, and you may be leading them in the wrong direction.

Eric, great to see you back making videos. I really depend on your viewpoint, as well as David Rosenberg, to help me understand the economic picture in making my investment decisions. I read on X where you are fighting liver cancer I believe. I include you in my prayers. Not only do I see you as a smart young man, but you also seem like a good, hardworking young man. All the best in your fight!

Investors can’t predict the future, bearish periods automatically give way for a new set of stocks to buy and watch while setting the stage for a new profitable uptrend. I have come across articles of people that grossed profits up to $250k during this crash, what are the best stocks to put on a watch list or buy at the moment?

This Rule just triggered and almost every indicator we having is flashing red. Good luck everyone!

00:26 📊 The S rule is an economic indicator designed to spot a recession when the 3-month average of the unemployment rate rises more than 0.5% from its 12-month low point. 01:04 📈 The current S rule reading is 0.3%, slowly increasing throughout 2023, indicating economic weakening, but it hasn't yet reached the 0.5% threshold for recession confirmation. 01:59 🔄 On average, the S rule triggers about 2 months after the official recession begins, but it can take up to 3 months or more in some cases, making it a confirmation tool rather than a leading indicator. 03:10 🧐 To anticipate a recession in 2024, consider leading indicators like the yield curve inversion (currently inverted for 13 months), the conference board leading index (below -4% for 13 months), and the employment trends index (contracted for 12 consecutive months). 05:18 📉 The combined factors suggest that the S rule will likely continue to rise through early 2024, leading to a recognition of recessionary conditions. Stock market performance is not a reliable indicator of economic conditions.

Missed you EPB!

I really enjoy watching your videos, but you have missed all your predictions so far. It would be nice that you come back to your previous predictions and try understand what has changed in economy now vs before. Best regards.

The Sahm rule has a critical flaw in todays world: all the data we get is always optimistic or favoring government-desired outcomes at time of publishing and then it gets revised to actual outcomes much later resulting in the data being useless as leading indicators. This phenomenon renders the Sahm rule much too lagging to be of much use anymore.

Hurry and buy this bubble top before you have to pay half price in a few years. At this point, I'm still at a crossroad regarding whether or not to liquidate my $138k stock portfolio. What's the best way to take advantage of this current market?

We’ve been in a recession for over a year. They just changed the definition of it, this is all silly any anyone who has a decent idea of how things works knows what has been going on for awhile. The stock market is being skewed by a handful of the biggest companies, remove those and we’re practically in a depression and in someways it’s worse.

Concerns about a potential recession and the Fed's talk of interest rate hikes have left me uneasy. I'm unsure about my $600K portfolio strategy, considering the uncertainty of a recession and the possibility that interest rates may not rise significantly

Recessions never happen when you expect them.. And it doesn't matter which graphs you use to forecast it - - every analyst has the same graphs, expecting the same event. so, it wont happen till the graphs overextend and everyone thinks "this times different"

Claudia Sahm has done interviews where she said she expects the rule to trigger, but fail this time.

This channel has predicted 20 out of 2 recessions successfully, congratulations!

Good note at the end about markets not necessarily having gotten hit hard as a recession just starts, but the all-time high was indeed months in the past by the time recession was apparent. Markets being forward looking, unemployment was still spiking up before markets found their ultimate bottom in March 2009 as well. Buy the dip traders will see that the turn in unemployment will eventually happen, and will be buying back into the market while mainstreet is still getting walloped. By the time the top in unemployment is finally reached, the market has already left the bottom months prior.

Thanks for your video! Didn't the unemployment rate go down in this last month? You seem confident unemployment will trend up. Why? Again, thanks for your video!

The stock market has been on a tear over the last month on hopes for a dovish pivot from the Fed, but investors like me have seen this movie before whereby i'm left pondering if to sell off 30% of my $450k portfolio which comprised of plummeting stocks or hold on.

The stock market is a way to hedge against inflation. Most notably amidst recession, investors need to understand where and how to allocate funds to hedge against inflation and still make profits.

The fed has been actively trying to increase unemployment to stifle wage inflation. There has never been a situation like this because wage inflation has never been the primary focus. Like others, I'm not a bull in today's market, but I sure as hell am not basing my forecasts on the weakest argument for a recession.

Another interesting indicator is the fed funds rate. Every recession the fed starts lowering rates after a hold of rates and once rates start dropping a recession typically starts 6 mknths after the first drop of rates. So everyone cheering for rates to drop are nkt looking at historic events.

Great video..but I also saw a video not long ago..where the creator of the Sahm Rule said she believes this time will be different. Go figure. She's expecting her Rule to be broken this cycle.

The complication is that these are proxy indicators based upon previous patterns. But COVID was a man-made artificial event which became a disaster due to mis-handling. The macro system is still recovering from that and, like all things in nature, will "ring" meaning it will react/over-react/under-react until it stabilizes and those old patterns come back. In the meantime the traditional proxies will be less predictive of the future.

Glad you included the part about the stock market being a barometer because that was going to be my next question after the summary. Very interesting and definitely something to look out for in the coming months.

Yay! Early Xmas gift. Thanks, EPB! Merry Christmas to you

This seems to not consider the parttime employment. People can grab a doordash or pizza delivery to fill but that is not going to be their long term healthy employment.

Are these rules based on data from the Federal Government? If so it can’t be relied upon because we all know the numbers are unreliable. The numbers are reported which juices the markets, then adjusted lower months later with no adverse affects.

Looking big forward to seeing a end of year total debt anaylsis. Will be interesting.

Even a broken clock is right twice in a day. Nothing to see here, let’s move on.

The biggest economic difference this time is the 36% deficit spending Uncle Sam is doing. That's a lot of anti-recessionary spending. This time around, all the usual indicators can be thrown out the window for now. The only thing that matters is when does the labor market really start to turn south.

dude, you should post it at least once a week for us.

Sahm rising? I'm a moon midheaven ascending 8th house glyphed aries.

Sahm said she thinks we'll trigger the rule but not get a recession

Let’s freaking goooo EPB!!! This shite needs to correct asap! (Even if it means serious economic pain in the short-run)

Summary of where we sit today (12/22/23): leading economy is contractionary and has been for quite a while (18+ months in the case of the LEI). Aggregate economy is slowing in growth, but still positive in growth. The MOST LIKELY outcome is a recession sometime in the next 18 months. We don't know how deep or how long until the leading indicators flip, signaling the start of a new economic growth cycle. IF leading indicators turn around tomorrow (all positive, expansionary values) in January 2024, that will be WEAK evidence that the recession will not be a long one, but still too early to call. To avoid a technical, NBER recession we would need to see the leading economy start doing fantastically well, and soon.

This seems like a weird case when the absolute values for unemployment are still WAY below normal. Like... Everything about now is weird.

So it tells you it's recession, 2-3 months after the recession officially started. What's the definition of recession here? Fall in GDP in two successive quarters? If so, why do you need Sahm rule at all if it's one quarter late?

Instead of trying to predict and prognosticate whether or not we’re going into a recession, a better strategy is simply having a portfolio that’s well prepared for any eventuality, that’s how some folks' been averaging 15% every 7week according to Bloomberg

The ETI had been negative for 12 consecutive months but still no recession happend! Even considering that they are called in retrospect. In all cases an recession has been called within less then 6 months. So as long as unemployment doesn't yump and stay way above 4% we will not get it. We had an recession in 2020 and some similar to a recession in early 2022 -period of economic decline that did not persist.

We can fix this easily and not go into recession. Simply change how we measure unemployment and change the definition of recession.

and yet properly adjusted Cont. Claims are getting better not worse. This stat should have been included here.

You got it win the headlines the other day

Excellent video Eric. Very clear and logical.

Are you going to do an update on this? Since this just triggered the other week

Powell must have noticed this which is why he flipped. Global depression on the way!!

I think it's possible this situation could have other factors in play. But, those other factors could tip the rule either way.

What month was the 0.19% mark hit? Seems pertinent if that's historically 3-4 months (factoring lagging data) before a recession would begin.

What exactly are you suggesting? That the stock market will drop during the recession like it did in 2020 and 2008? Why would that happen? Earnings already decreased. For there to be another market drop, earnings would have to be expected to decrease even more

This so because a recession is often defined as a rise in unemployment by 0.5% points. Her Sahm-Rule is very close to that Definition.

Your videos are awesome❤ Always a must watch for me

I'm not a bull, but clickbait like this is getting old.

Clickbait means the title has nothing to do with the video. I feel like most of the video focused on this rule so I dont think its clickbait. Whether hes right or wrong about his prediction doesn't matter.

Gotta say the “It’s Starting” in the video thumbnail is pretty clickbaity and misleading after watching the whole video. You also point out that the Sahm rule is not predictive but you weave it into your larger speculation for what’s to come. By definition the Sahm rule should not be a part of any speculative argument

Take a drink every time he says : " SAHM RULE ".

It’s going to be really hard for a recession to kick in when the economy is still solid and the Fed has signaled a pivot to loose money in 2024.

So should i buy a home in 2024 or wait until 2025

Every year someone says there's about to be a recession, that means that everyone always thinks a recession is always on the horizon, and these numbers are meaningless.

How will the "Sham Rule" behave in a long deflationary period?

The issue with this analysis is quite clear; it's primarily retrospective, focusing only on the past unemployment rate. This means if there's a drop in future unemployment, the author's prediction might not hold up.

Can you please give us an update on this “reading “ in Q1 2024?

Couldn't agree more. Headed toward a cliff and people are too busy looking at the clouds. I still average into my stock portfolio weekly, regardless of market conditions as I am a short-medium term bear but long term bull. I have been recommending everyone I know to pay off consumer debt and build up an emergency fund ASAP. But bad debt is at an all time high and people are out of savings. 2024-2025 is going to get weird.

Title is kind of misleading as this rule is a lagging indicator.

Can you compare previous stagflations to our economic situation

The issue is that unemployment can and is remaining low. Along with inflation. Still, youre On the right track. Just early imo

We need deflation. Prices are too high. We need a reset.

Our economy has been steaming along for too long and I feel like it will run out of steam maybe during 2024.

Video production on this one is amazing!

Your research and the way you explain the data is amazingly easy to understand

Thanks for this great rule. I will use this for my penny stocks day-trading.

Scrolled through old videos to see if this was worth my time. Guy was calling for a real estate crash in 2022. Nope

I learn new things from your video every time

And that's why you always invest financial/liquidity conditions, not economic conditions.

She had an interview with some youtube channel that escapes me at the moment, but she basically said that the rule does not apply and it's broken. Now I don't know if she said that because it's true or because of political/personal reasons.

the 10 minus 3 is currently at 21 months and counting? :_)

You didn’t prove anything with your point about the stock market. It was fuzzy at best and didn’t apply to all cases. You also didn’t talk about what levels of unemployment we saw before those specific declines. lol

Love your videos but I must say that in a recent interview, Sahm herself said this time really could be different. The LEI has shown a recession is imminent for the last year and just the opposite has happened. Is the lag time just really extended this time? We shall see and keep the vids coming.

Great analysis and presentation, as always.

Just because it is getting widely talked about in media means i need to be a contrarian. Time to go leveraged long.😂

will any of these econ indictors matter if there's more gov deficit spending and yellen drains the tga going into the election next year

Lots of false signals with this...the labor market is only one component of GDP, and the GDP calculation itself is flawed: statisticians adds government revenues to private sector production when they should be subtracting them. It's the fly in the ointment - government spending and accounting - that screws this whole thing up.

2025 recession confirmed.

President Camacho says "print lots and lots of money"

Sahm Rule was 0.0 when the Nasdaq peaked in Mar 00 and the Sahm Rule was 0.2 when the S&P peaked in Oct 07 Sahm Rule is 0.3 today

stock market ain't the economy, and we've got a negative money supply growth rate.

It would be great if you put out a video talking about previous predictions and why they ended up not playing out the way you thought. These videos are informative, but if you are constantly calling for a recession (which will always eventually be correct, just like a broken clock) then it hurts your credibility in my opinion. Thanks for the videos.

Thank you, great video

We are likely to be in recession in 2024, but the fed has shown it is willing to act. What should matter for someone is whether their industry they are employed in is in recession, some will be affected worse than others.

another golden nugget. Thanks!

People need to STOP looking at stock markets to correlate what is going on with the economy! These markets are driven by 10-20 names people! Look at the LEI (leading economic indicators), down 18 months in a row!

Keep going Eric!

I need a separate YT channel with explanations of this one 😅 But thanks for the conclusions

Recessions don't last for very long.

if I would to adding the other variable is that it is a demographic of age of period in 5 years

What's telling is that the Sahm indicator is actually now dropping. Having been on the St Louis Fed website - none of the last 4 recessions going back to 1985 have had a reversal like that.