The above chart displays the Real-time Sahm Rule Recession Indicator from January 1, 1980 onward. The gray bars represent recessionary periods as determined retrospectively by the NBER.

The indicator represents the percentage increase of the three-month moving average of national unemployment rate relative to its 12-month low. The Sahm rule says a recession starts when this percentage is .5 or higher. The index was designed by Claudia Sahm as a way to automatically trigger stimulus payments in a recession.

The Sahm rule is a highly accurate early indicator, but tends to lag a behind historic NBER turning points. Reaching the .5 threshold can thus be read as a sign that we are already a few months into a recession.