Scenario × Asset Analysis

What Happens to Trade Balance When the Sahm Rule Exceeds 1.0?

The Sahm Rule triggers recession alerts when unemployment rises 0.5 points. What happens when it exceeds 1.0, signaling a deepening downturn?

Trade Balance

-57,347

as of Feb 1, 2026

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Trigger: Sahm Rule Recession Indicator

0.20%

Condition: exceeds 1.0

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How Trade Balance Responds

When the Sahm Rule Exceeds 1.0, Trade Balance typically responds to the changing macro environment. US trade balance in goods and services, negative = trade deficit. This scenario is particularly relevant for fx & dollar because changes in Sahm Rule Recession Indicator directly influence the macro environment for Trade Balance. Investors should monitor both the trigger condition and Trade Balance's response to position accordingly.

Scenario Background

The Sahm Rule identifies recessions in real time: when the three-month moving average of unemployment rises 0.5 percentage points or more from its 12-month low, the economy is already in recession. A Sahm value exceeding 1.0 indicates a severe acceleration in unemployment, historically signaling not just recession onset but a deepening downturn.

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Historical Context

The Sahm Rule has accurately identified every recession since 1970 with no false positives at the 0.5 threshold. Values exceeding 1.0 occurred in every recession from 1970 onward: 1974 (2.0 peak), 1980 (2.0), 1981-1982 (2.5), 1990 (1.8), 2001 (1.3), 2008-2009 (4.5), and 2020 (11.0 peak during COVID). The 1981-1982 recession showed Sahm reach 1.0 in July 1981 with unemployment at 7.2%, peaking at 10.8% in November 1982. The 2008 Sahm crossed 1.0 in October 2008 with unemployment at 6.5%; unemploy...