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The sharp jump in unemployment raises recession fears

Data from the Bureau of Labor Statistics (BLS) released on Friday painted a grim picture for the nation as a rise in the unemployment rate sent panic on Wall Street.

The latest jobs report “revealed that the unemployment rate last month rose from 4.1% to 4.3%, still a historically low number but a sign that the US may be in the early stages of of a recession by one measure,” he reported. USA Today.

“Keep calm. Most economists say the measure, called the Sahm rule, probably won't apply this time because of the unprecedented ways the pandemic has upended the economy and labor market,” added the medium “Still, a 4.4% unemployment rate is sending stocks higher and may signal further weakening in an already slowing labor market.”

Economist John Lonski said he can “smell a recession.”

“Markets are no longer worried about inflation, they're worried about the possibility of a recession,” he told Fox Business.

“I'm starting to smell a recession coming… that jump in the unemployment rate, my God, 4.3 percent. That's been up a lot recently,” he added. “The market is right. We have strong reasons to be concerned about the sustainability of business profits going forward.”

Friday's report of the highest unemployment rate since October 2021 sent the S&P 500 down 1.4%, while the Dow Jones Industrial Average fell 363 points.

Economist Claudia Sahm, who has accurately predicted every US recession since the 1970s, believes the “Sahm ​​rule” doesn't apply this time.

(Video credit: Bloomberg Television)

“According to Sahm's rule, if the unemployment rate, based on a three-month average, is half a percentage point above its lowest point in the past 12 months, the economy has entered a recession. If unemployment reached 4.2% in July, the three-month average would be 4.1%, half a point above the 3.6% average a year ago,” USA Today explained.

“A recession is not imminent, although the Sahm rule is about to be triggered,” Sahm, a former Federal Reserve economist, he wrote last week. “The shift from a labor shortage caused by the pandemic to a burst of immigration is adding to the rise in the unemployment rate.”

In a press conference this week, Fed Chairman Jerome Powell said, “It's not like an economic rule where it tells you something has to happen.”

“What we think we're seeing is a normalized labor market and we're watching carefully to see if it turns out to be more,” he added.

Despite the reassurances, many feel the writing is on the wall. Social media users responded to the sad news of the day.

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The sharp jump in unemployment raises recession fears
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