What Can the Sahm Rule Tell Us About the Economy?

In this episode, Schwab's Chief Fixed Income Strategist Kathy Jones interviews former Fed economist Claudia Sahm. And Schwab's Chief Investment Strategist Liz Ann Sonders discusses the December jobs report with Kevin Gordon. Liz Ann and Kevin look at the differences between the numbers in the household survey and the establishment survey—and how this data will affect the fight against inflation, among other topics. You can see the charts they mention in this article: Mixed Signals: December's Jobs Report . Kathy and Claudia discuss the Sahm rule, which is an indicator of a recession, and its purpose in providing policymakers with direction for providing relief during economic downturns. The conversation then shifts to the labor market, with Claudia highlighting its resilience and the need for a sustainable expansion. The discussion moves on to inflation, with Claudia explaining that recent inflation has been driven by supply-side shocks rather than demand. She expresses confidence in the Fed's ability to reach its 2% inflation target. Their conversation also touches on the debate within the Fed and the potential impact of the Fed's communication on financial markets. You can follow Claudia Sahm's newsletter, Stay-at-Home Macro , at https://stayathomemacro.substack.com/ . On Investing is an original podcast from Charles Schwab . For more on the show, visit Schwab.com/OnInvesting . If you enjoy the show, please leave a rating or review on Apple Podcasts . Important Disclosures The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision. All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed. Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve. All corporate names and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security. Supporting documentation for any claims or statistical information is available upon request. The comments, views, and opinions expressed in the presentation are those of the speakers and do not necessarily represent the views of Charles Schwab. Investing involves risk, including loss of principal. The policy analysis provided by the Charles Schwab & Co., Inc., does not constitute and should not be interpreted as an endorsement of any political party. Diversification strategies do not ensure a profit and do not protect against losses in declining markets. Indexes are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly. For additional information, please see schwab.com/indexdefinitions. The information and content provided herein is general in nature and is for informational purposes only. It is not intended, and should not be construed, as a specific recommendation, individualized tax, legal, or investment advice. Tax laws are subject to change, either prospectively or retroactively. Where specific advice is necessary or appropriate, individuals should contact their own professional tax and investment advisors or other professionals (CPA, Financial Planner, Investment Manager) to help answer questions about specific situations or needs prior to taking any action based upon this information. Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance. Forecasts contained herein are for illustrative purposes only, may be based upon proprietary research and are developed through analysis of historical public data. (0124-4ABS) Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.