Recession Fears Rise Despite Strong Labor Market

Despite strong job growth under the Biden administration, recent economic data has sparked recession fears. Although the economy is not currently in a recession by the formal definition, an increase in the unemployment rate has triggered the “Sahm Rule,” a historically accurate recession predictor. While some economists, including the rule`s creator, believe this time is different, investors are reacting to the potential for a recession. This shift in outlook is driven by concerns that the Federal Reserve`s efforts to combat inflation by raising interest rates may now need to be more aggressive, potentially harming the economy.