The Federal Reserve has two mandates: achieving maximum employment and keeping prices stable. It does this by controlling the money supply and raising or lowering interest rates. The Fed’s fight against inflation has been a common topic in financial news for several months, but not as much coverage has been given to the job market. The economy as a whole has remained robust in this high inflation environment, which has kept unemployment comparatively low.

I thought it might be interesting to look at a little-known recession indicator the Fed uses that is entirely based on unemployment numbers. It’s called the Sahm Rule and we’ll take a look today at whether it is signaling recession.

But before we start on that discussion, let’s take a quick look at the Personal Consumption Expenditures index as reported last week and if it has caused Jerome Powell to change his narrative regarding upcoming interest rate cuts by the Fed.