Indicators · The labour market
US unemployment
Normal Downturn signal
4.1% in Oct 2026. The three-month average is at its low of the previous twelve months.
The rise above the low of the previous twelve months is lower than 64% of the readings since 1990.
US recessions Periods when this signal was on
What it measures
The US unemployment rate, and how far its three-month average has risen above its lowest point of the previous twelve months.
Why it matters
A rise of half a percentage point has marked the start of every US recession since 1970 (the Sahm rule). Once unemployment starts to rise it tends to keep rising, because lost wages cut spending and lower spending cuts more jobs.
When it triggers
Triggers when the three-month average is 0.5 percentage points or more above its low of the previous twelve months.
Where it fits
Unemployment starts to rise. The argument predicts: Unemployment starts to rise within a few months of a market crash, and the jobs lost in work exposed to AI are not regained.
Other possible causes. Every recession triggers these signals, and most of the jobs lost are later regained.
A trigger can count as evidence for point 5 of our view, a recession in which spending fails.
The prediction
Open Set 8 Oct 2026
- If we are wrongtriggers, then stops
- Start0.00 pointsSep 2026
- Now0.00 pointsOct 2026
- If we are right0.50 points or aboveby Dec 2026
- Severe5.69 pointsin the model, if our view is right
If our view is right, this signal triggers by Dec 2026: the rise in US unemployment above its low of the past year reaches 0.50 points or above. The date comes from the model, in which US unemployment rises 1.4 points by the end of 2026. In the model this measure reaches 5.69 points by Sep 2027.
If it triggers and then stops being triggered on two consecutive readings, that counts against our view, which expects a downturn to deepen for several years once it begins. The deadline refers to the period the data cover. If it passes without a reading of 0.50 points or above, that counts somewhat against our view.
When the rule was set
The rule was set on 24 Sep 2026, when it was not triggered. Its threshold is in common published use. It comes from the Sahm rule.
How often it has been on
Applied to past data at the end of each month from Jan 1990, using only what had been published by then, it was on in 21% of months to 2019 and 18% since 2020. More than six months from any US recession as dated by the National Bureau of Economic Research, it triggered in Aug 2003 and Aug 2024. The rule was set with these years in view, so these figures cannot show how well it predicts.
Past triggers
On the data published at the time, it triggered in Nov 1990, Aug 2001, Aug 2003, Mar 2008, May 2020 and Aug 2024.