Recession Fears Rise Despite Strong Labor Market

Despite strong job growth under President Biden, recent economic data, particularly a quickly rising unemployment rate, has fueled recession fears. While not technically in a recession, some economists believe the rapid change in unemployment, as measured by the “Sahm Rule,” is a reliable predictor of an impending recession. However, even the creator of this metric acknowledges that the current strong economy suggests this time might be different. Despite this, investors are reacting to the negative economic indicators, causing stock market declines and increased volatility. The Federal Reserve`s plan to combat inflation by raising interest rates is now in question, as a rapidly weakening economy could force them to cut rates sooner and more aggressively than anticipated, potentially causing a recession.