San Francisco Fed Provides New Method to Monitor U.S. Economic Recession
Researchers at the San Francisco Fed have proposed a new recession warning indicator that provides economists with more tools to assess whether the U.S. may be heading into a recession. This tool, called the Labor Market Stress Indicator (LMSI), reveals regional differences in the labor market by counting the number of states where the unemployment rate has risen at least 0.5 percentage points from its lowest level in the past 12 months. The research report notes: 'Whenever 30 or more states experience a simultaneous acceleration in unemployment rates, the national economy almost always falls into recession. The LMSI method is transparent — it only counts states with accelerating unemployment rates — easy to interpret, and provides valuable insights into the geographic distribution of economic stress.'
