In late July, the outlook for the U.S. economy appeared strong, with some observers suggesting that the Federal Reserve had achieved the long-awaited soft landing despite recent cooling in the labor market. However, just a week later, markets briefly panicked as the national jobs report for July showed monthly payroll employment growth slowing to 114,000 jobs, falling short of the projected 175,000 job gain.
Some analysts invoked the "Sahm rule," which uses a sharp increase in the average unemployment rate as an early indicator of recession. The unemployment rate jumped to 4.3%, nearly a full point higher than its low of 3.4% in April 2023.
