PODCAST:Masters in Business
TITLE:At the Money: Forecasting Recessions with Claudia Sahm
DATE:2024-01-31 00:00:00
URL:
MODEL:gpt-4-gizmo
In the "Masters in Business" episode titled "At the Money: Forecasting Recessions with Claudia Sahm," Bloomberg's Barry Ritholtz discusses with Claudia Sahm, a former Federal Reserve economist and creator of the Sahm Rule, how to accurately identify in advance and in real-time when the economy is going into recession. Sahm explains that a recession is a broad-based contraction in economic activity that affects all sectors and regions, varying in length and severity depending on its cause. She details her Sahm Rule, which looks for relatively small increases in the unemployment rate to signal a recession, noting its simplicity and perfect track record since the 1970s. Sahm argues that most of the inflation seen post-pandemic was due to disruptions from COVID-19 and the war in Europe, rather than demand, suggesting that traditional wisdom linking inflation to immediate recession risks might not apply in this unique scenario. Despite the historical correlation between rising inflation and Federal Reserve interest rate hikes leading to recessions, Sahm suggests that the current situation is different due to its roots in pandemic and geopolitical disruptions. She emphasizes the importance of monitoring the labor market for signs of economic downturn, as it directly affects consumer spending and overall economic health.
