How Central Banks Use the Sahm Rule to Trigger Recession Alerts

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · Jun 29, 2026 · 10m · transcript

Episode 81 of Monetary Policy Explained dives into the Sahm Rule, a real-time recession indicator developed by former Fed economist Claudia Sahm. Lucas and Luna break down how this rule works—triggering when the three-month average unemployment rate rises half a percentage point above its 12-month low—and why it has caught the attention of central bankers in 2026. They explore its track record, including how it signaled every US recession since the 1970s without false alarms, its role in the Fed's policy toolkit, and why some economists caution against relying on a single rule. The hosts…