Unemployment Rate vs S&P 500
The U.S. Unemployment Rate (UNRATE on FRED, U-3 from BLS Current Population Survey) rose from a cycle low of 3.4% in January and April 2023 to 4.3% in July 2024, a 90bp increase that triggered the Sahm Rule.
Also known as: Unemployment Rate (U3) (unemployment, U3, jobless rate) · S&P 500 ETF (SPY) (ETF_SPY, S&P 500, SPX, SP500)
Why This Comparison Matters
The U.S. Unemployment Rate (UNRATE on FRED, U-3 from BLS Current Population Survey) rose from a cycle low of 3.4% in January and April 2023 to 4.3% in July 2024, a 90bp increase that triggered the Sahm Rule. SPY returned +24.0% in calendar 2024 against that backdrop, the cleanest historical example of equities ignoring a labor-market warning. The Sahm Rule, named after economist Claudia Sahm, fires when the 3-month moving average of U-3 rises 0.50 percentage points or more above its trailing 12-month minimum. It triggered every U.S. recession since 1950, with the 2024 trigger being the open exception that has not yet produced a recession.
What UNRATE actually measures and how SPY relates
UNRATE is the seasonally adjusted U-3 unemployment rate from the BLS Current Population Survey, published the first Friday of each month at 8:30am ET as part of the Employment Situation report. The household survey samples roughly 60,000 households, classifying each working-age adult as employed, unemployed, or not in the labor force. SPDR S&P 500 ETF (SPY) tracks the cap-weighted S&P 500, the benchmark for U.S. large-cap equity claims on the underlying economy.
The two are connected through the corporate-profits-share-of-GDP channel and through Fed policy reaction. Rising unemployment historically signals slower wage growth, which compresses input costs and can preserve margins; it also signals slower aggregate demand, which compresses revenue. The net effect on S&P 500 earnings depends on which channel dominates. Federal Reserve research (Gertler and Karadi 2015, working paper series) documents that the Fed's response function shifts when U-3 rises through the natural rate, and rate cuts then become a tailwind for SPY multiples. The Sahm Rule is the formal trigger that captures this transition.
The 2024 Sahm Rule trigger and the equity decoupling
U-3 rose from 3.4% in January 2023 to 4.3% in July 2024. The Sahm Rule three-month-moving-average minus trailing-12-month-minimum measure crossed +0.53 percentage points in July 2024, triggering the recession indicator. In all 11 recessions since 1950, the Sahm Rule fired during the recession with a median lead of three months before NBER's official declaration. The 2024 trigger has now been outstanding for over 21 months without a recession declaration, the longest open trigger in the rule's history.
SPY ignored the trigger entirely. SPY closed July 31, 2024 at 549.84 and ended 2024 at 588.22 for a +24.0% calendar-year total return. The decoupling reflects three structural factors. First, the AI capex cycle drove S&P 500 earnings upward independent of broad labor-market conditions: Magnificent 7 companies represented roughly 32% of SPY weight in 2024 and contributed disproportionately to earnings growth. Second, Fed easing began September 2024 (50bp cut at the September 18
90-Day Statistics
Explore Each Metric
Related Scenarios & Forecasts
Get daily macro analysis comparing key metrics delivered to your inbox. Stay ahead of market-moving divergences.
Frequently Asked Questions
What is the Sahm Rule and when did it trigger?+
The Sahm Rule fires when the 3-month moving average of the U-3 unemployment rate rises 0.50 percentage points or more above its trailing 12-month minimum. Created by economist Claudia Sahm during her tenure at the Federal Reserve Board (Sahm 2019, Brookings), the rule has triggered during every recession since 1950 with a median three-month lead before NBER's official declaration. The 2024 trigger fired in July 2024 when the measure crossed +0.53 percentage points, with U-3 having risen from 3.4% in early 2023 to 4.3% in July 2024. The trigger has now been outstanding for over 21 months without a recession, the longest open trigger in the rule's history.
Why didn't the 2024 Sahm trigger produce a recession?+
Three factors. First, the U-3 rise was driven more by labor supply expansion than by job destruction: labor force participation rose from 62.4% in early 2023 to 62.7% in mid-2024 as immigration and prime-age participation increased. Second, payroll growth remained positive throughout the trigger window, averaging 144,000 per month over the trailing 12 months as of July 2024. Third, the Fed began cutting in September 2024 (50bp cut at the September 18 FOMC, 100bp total through year-end), removing real-rate restriction before recession could materialize. Sahm herself publicly stated the 2024 trigger was likely a false positive driven by labor supply rather than labor demand.
How did SPY behave during the 2024 Sahm trigger window?+
SPY closed July 31, 2024 at 549.84 and ended calendar 2024 at 588.22 for a +24.0% calendar-year total return. SPY ignored the Sahm trigger entirely, driven by AI capex cycle earnings growth (Magnificent 7 represented roughly 32% of SPY weight and contributed disproportionately to earnings growth), Fed easing in the second half of 2024, and the absolute level of U-3 staying below the natural-rate estimate of 5.0 to 5.5%.
Related Comparisons
Explore Across Convex
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.