Based on current macro regime conditions and sahm rule recession indicator's historical behaviour in similar regimes, the model projects 0.12% by 2026-12-31 ( -4.1% from 0.13% today). The 68% confidence range is -0.38% to 0.63%; the wider 95% range is -0.87% to 1.12%. Methodology below the headline.
Sahm Rule Recession Indicator Forecast 2026
Quantitative analysis from 244 observations of Sahm Rule Recession Indicator history, joined to four universal macro regime classifications. Numbers are computed, not narrated.
Performance by Window[02]
| WINDOW | N | ANN RET | ANN VOL | RET/VOL | HIT % | TOTAL |
|---|---|---|---|---|---|---|
| 1Y | 12 | -51.88% | 154.84% | -0.34 | 27.3% | -51.85% |
| 3Y | 35 | 65.27% | 133.43% | 0.49 | 41.2% | 333.33% |
| 5Y | 60 | 31.00% | 399.89% | 0.08 | 46.3% | 285.71% |
| 10Y | 120 | 15.80% | 591.67% | 0.03 | 42.7% | 333.33% |
| All | 244 | -5.50% | 449.23% | -0.01 | 43.4% | -75.47% |
Annualized total return = (1 + total)^(1/years) - 1. Ret/Vol is the annualized return divided by annualized volatility (Sharpe-equivalent without risk-free subtraction). Hit % = pct of single periods that were positive.
Where We Are Now[03]
Historical Analogs[06]
Periods where Sahm Rule Recession Indicator sat at a similar percentile rank to today, with what happened over the next 30 / 90 / 252 trading days. Analogs are clustered to avoid double-counting nearby dates.
| DATE | VALUE | +30D | +90D | +1Y |
|---|---|---|---|---|
| Jun 1, 2023 | 0.0700 | 42.86% | 371.43% | 514.29% |
| Nov 1, 2022 | 0.0700 | -57.14% | -100.00% | 328.57% |
| Mar 1, 2019 | 0.1300 | -100.00% | -76.92% | 130.77% |
Worst Historical Drawdown[07]
Largest Single-Period Moves[09]
- Apr 1, 20201233.33%
- Aug 1, 2016333.33%
- Aug 1, 2017200.00%
- Dec 1, 2018200.00%
- Jul 1, 2019200.00%
- Jul 1, 2021-666.67%
- Aug 1, 2015-333.33%
- Apr 1, 2017-333.33%
- Sep 1, 2018-333.33%
- Jan 1, 2023-333.33%
Calendar-Month Seasonality[10]
Average single-period return aggregated by the calendar month in which the period ended.
| MONTH | AVG RETURN | HIT % | N |
|---|---|---|---|
| January | -5.61% | 31.3% | 16 |
| February | 10.18% | 42.9% | 14 |
| March | -16.70% | 37.5% | 16 |
| April | 7.16% | 29.4% | 17 |
| May | -1.88% | 50.0% | 14 |
| June | 48.48% | 75.0% | 16 |
| July | -10.59% | 50.0% | 18 |
| August | 31.98% | 60.0% | 20 |
| September | -30.58% | 36.8% | 19 |
| October | 0.93% | 35.3% | 17 |
| November | -2.18% | 35.0% | 20 |
| December | 7.30% | 38.9% | 18 |
N = 244 OBS · GENERATED 2026-05-18 10:00Z
Forecast Approach
regime implied: The current macro regime classification (Goldilocks, Reflation, Stagflation, or Deflation) dictates the expected direction and magnitude of movement, calibrated against historical regime performance.
Key Drivers & Risks
- •Economic growth
- •Yield curve
- •Labor market
- •Credit conditions
- •Leading indicators
Historical Volatility
Low: composite indicators move slowly
How Sahm Rule Forecasts Have Held Up Historically
The Sahm Rule (3-month average UR rises 0.5pp above the prior 12-month low) has a 100% true-positive rate over 1949-2025 with one false-positive scare in 2024. When the rule triggers, NBER recession dating has historically followed within 0-12 months. The 2024 false positive (3-month UR average rose to 0.53pp above the 12-month low in July 2024) is the only post-1949 exception to the rule's perfect track record.
Regime-conditional models on Sahm are tautological because the rule is itself a recession-regime trigger.
Regime Sensitivity for Sahm
Sahm Rule readings have clean regime mapping. Below 0.10pp anchors goldilocks labor regime; 0.10-0.30pp signals labor cooling; 0.30-0.50pp signals labor weakening; above 0.50pp triggers the rule and historically front-runs recession.
The April 2026 setup has Sahm at 0.27pp, well below the 0.50 trigger but above the early-2024 lows. The regime conditional reads as moderately negative on direction (rising) but not at recessionary thresholds. The 2024 false-positive episode complicates the signal: the rule briefly triggered but didn't translate to NBER recession because the unemployment rise came from labor-supply expansion, not demand destruction.
What Drives Sahm Forecast Errors
Three structural issues drive Sahm forecast errors. First, the rule assumes unemployment rises reflect demand destruction, not supply expansion. The 2024 episode was supply-driven (immigration), invalidating the recession signal.
Second, BLS payroll and unemployment revisions can change the historical Sahm levels. The February 2025 benchmark revision cut prior payroll estimates by 800k, raising questions about real-time signal reliability.
Third, the rule was designed for the post-1949 labor regime; structural changes (gig economy, remote work, immigration policy shifts) may be re-shaping the relationship between unemployment moves and recession risk.
How to Use This Forecast in Practice
For Sahm Rule, the 0.50pp threshold is the actionable trigger but with the 2024 false-positive caveat. Pre-trigger readings rising toward 0.40+ warrant elevated recession monitoring; post-trigger readings at 0.50+ historically front-run recession.
The cleanest cross-check is the JOLTS quits rate plus continuing claims. When Sahm rises with quits falling and continuing claims rising, the recession signal is high-conviction; when Sahm rises with quits stable, the signal is supply-driven and lower-conviction. The 68% band on Sahm is the tightest of any recession indicator because of the slow-moving nature of UR averages.
Frequently Asked Questions
What factors could push Sahm Rule Recession Indicator higher?▾
The primary drivers that tend to lift Sahm Rule Recession Indicator depend on the current macro regime. Recession indicators distill complex economic dynamics into actionable signals. The Sahm Rule, triggered when the 3-month average unemployment rate rises 0.5 percentage points above its 12-month low, has a perfect track record since 1970. Combined with yield-curve inversions and declining leading indicators, these metrics help traders identify turning points before they become consensus. Convex tracks these drivers live across the Recession Indicators category and flags when multiple forces align in the same direction. See the "Key Drivers & Risks" section on this page for the current list, and check the regime dashboard for how the macro backdrop is currently tilted.
What factors could push Sahm Rule Recession Indicator lower?▾
The same transmission channels that drive Sahm Rule Recession Indicator higher operate in reverse when conditions flip. The risk drivers listed above map directly to scenarios that, if triggered, would pull this metric in the opposite direction. Convex aggregates these into a scenario-weighted probability distribution rather than a point forecast, so the magnitude depends on which scenarios activate.
Where does consensus see Sahm Rule Recession Indicator heading?▾
Rather than publish a point target that goes stale the day after release, Convex assembles consensus from the macro regime classification, active scenario probabilities, and historical base rates. Point forecasts from banks and strategists are worth reading for context, but they typically cluster around the consensus and miss the tail events that actually move markets. The scenario-weighted approach here captures that tail risk explicitly.
What is the historical range for Sahm Rule Recession Indicator?▾
Historical ranges for Sahm Rule Recession Indicator vary dramatically by regime. A level that is extreme in Goldilocks can be routine in Stagflation, and vice versa. The Historical Volatility section on this page describes the typical range and regime-specific behavior. For the full multi-decade history, visit the Sahm Rule Recession Indicator chart page, which includes selectable time ranges up to five years and downloadable data.
How often is the Sahm Rule Recession Indicator forecast updated?▾
This forecast page recalculates whenever the underlying data or regime classification changes, typically within hours of new data releases. The scenario probabilities refresh daily as the macro state is regenerated. Specific drivers listed on this page reflect the current state of the Convex regime engine, not static historical assumptions.
Is this forecast actionable for trading?▾
Convex forecasts are informational and educational. They describe probability distributions and regime-conditional paths rather than specific entry and exit levels. Traders and portfolio managers use them alongside other inputs including position sizing rules, risk management, and their own conviction calibration. They are not investment advice.
Get forecast updates for Sahm Rule Recession Indicator and related indicators.
Forecasts are model-based projections derived from current regime classification, scenario probabilities, and historical patterns. They are not investment advice. All investments involve risk.