Employment Data Increases Recession Odds: Is Crypto the Best Investment Now?
Last week's U.S. employment data revealed the unemployment rate for October at 3.9 percent. Although this figure is historically low, it has surpassed the earlier low of 3.4 percent recorded earlier this year.
This brings Sahm's rule to mind, as it closely monitors the potential onset of a recession. Created in 2019 based on research by Federal Reserve economist Claudia Sahm, this highly accurate indicator states that when the quarterly moving average (as the monthly rate often fluctuates too much) of the unemployment rate rises by 0.5 percent from the previous 12-month low, it signals that the economy will very likely enter a recession in the next 12 months.
Currently the quarterly moving average of the unemployment rate has increased to 0.33 percent from the one-year low, still far from the 0.5 percent threshold that indicates a recession, thus still insufficient but remains worrisome.
Confirming the indicator, historically, any activation of the Sahm rule will prompt unemployment to continue rising.
From the graph we can see how unemployment often reaches a cyclical low, before a recession, and then explodes upward above 4 percent, as seems to be happening over the past year. Today it is at 3.9 percent, after having been at levels similar to the lows of the past 50 years.
Could this signal a recession in the coming months?
Currently, the indicators present a mixed picture—consider the hiring rate, which has dipped below pre-Covid levels, juxtaposed with a consistently low layoff rate. Amidst this, consumer spending growth maintains its robust trajectory.
Turning attention to the cryptocurrency landscape, these weeks have proven quite eventful for Bitcoin. It showcased a positive performance of approximately 8
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