Sahm Rule vs S&P 500
Live side-by-side comparison with current values, changes, and key statistics.
Why This Comparison Matters
The Sahm rule triggers when labor-market deceleration reaches recessionary thresholds. When Sahm triggers while SPY rallies, equity markets ignore a reliable recession signal. Historically the resolution has been SPY drawdowns rather than Sahm reversals. The 2024 Sahm trigger alongside SPY highs was a notable divergence.
Cross-Asset Analysis
Before getting to the spread, note what each leg actually represents: Sahm Rule Recession Indicator is sahm Rule: 3-month average unemployment rise from 12-month low. Crossing 0.5% has signaled every recession since 1970, and S&P 500 ETF (SPY) is SPDR S&P 500 ETF, tracks the benchmark US equity index. Policy-driven transitions introduce sudden repricing into the Sahm Rule Recession Indicator-S&P 500 ETF (SPY) relationship because the two markets react to policy guidance on different timescales.
Policy interventions can mechanically reshape the Sahm Rule Recession Indicator-S&P 500 ETF (SPY) spread, most notably when central banks buy specific asset classes. Tactical allocators reposition across the Sahm Rule Recession Indicator-S&P 500 ETF (SPY) spread based on where each asset sits relative to its fundamental anchor. Regime dating based on Sahm Rule Recession Indicator-S&P 500 ETF (SPY) can be feedback-driven, because extreme spread values often clear via mean reversion or regime change.
Risk-off regimes compress correlations and compress the Sahm Rule Recession Indicator-S&P 500 ETF (SPY) spread into narrower ranges. Macro funds use the Sahm Rule Recession Indicator-S&P 500 ETF (SPY) spread to implement views cleaner than single-asset trades, pinpointing the particular macro factor they want to bet on. Correlation trading desks quote options on the Sahm Rule Recession Indicator-S&P 500 ETF (SPY) spread once the underlying relationship has been mapped across enough regimes.
90-Day Statistics
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Frequently Asked Questions
What is the relationship between Sahm Rule Recession Indicator and S&P 500 ETF (SPY)?+
Sahm Rule Recession Indicator and S&P 500 ETF (SPY) are connected through shared macro drivers across asset classes. When the dominant macro driver shifts, both respond, though with different sensitivities and at different speeds. The spread between Sahm Rule Recession Indicator and S&P 500 ETF (SPY) captures the specific macro signal that flows through this relationship.
When does Sahm Rule Recession Indicator typically lead S&P 500 ETF (SPY)?+
Sahm Rule Recession Indicator tends to lead S&P 500 ETF (SPY) during macro regime changes, where the more liquid asset moves first. In those periods, moves in Sahm Rule Recession Indicator precede corresponding moves in S&P 500 ETF (SPY) by days to weeks, depending on the transmission channel and the depth of each market.
How are Sahm Rule Recession Indicator and S&P 500 ETF (SPY) historically correlated?+
Long-run correlation between Sahm Rule Recession Indicator and S&P 500 ETF (SPY) varies by regime. Cross-asset correlations vary by regime, tending to tighten in stress and loosen during normal conditions. The correlation is not stable: it shifts with macro conditions, and the periods when it breaks down are often the most informative moments in the Sahm Rule Recession Indicator-S&P 500 ETF (SPY) relationship.
What macro conditions drive divergence between Sahm Rule Recession Indicator and S&P 500 ETF (SPY)?+
Divergence between Sahm Rule Recession Indicator and S&P 500 ETF (SPY) typically arises from idiosyncratic shocks in one asset, policy interventions, or structural shifts in demand. When one asset's idiosyncratic drivers dominate, the spread moves in ways that the common macro story does not predict, which is usually a signal to look more carefully at the specific drivers at work in Sahm Rule Recession Indicator or S&P 500 ETF (SPY).
Is Sahm Rule Recession Indicator a hedge for S&P 500 ETF (SPY)?+
Cross-asset hedges between Sahm Rule Recession Indicator and S&P 500 ETF (SPY) work when the macro drivers of the two assets are sufficiently decorrelated, which depends on the regime and therefore needs to be reviewed as conditions change. Effective hedging requires matching the hedge to the specific risk being protected, and the Sahm Rule Recession Indicator-S&P 500 ETF (SPY) pair is best stress-tested under scenarios the investor most worries about before being sized into a real portfolio.
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Data sourced from FRED, CoinGecko, CBOE, and other providers. This page is for informational purposes only and does not constitute financial advice. Past performance does not guarantee future results.