What Happens to Russell 2000 ETF (IWM) 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?
How Russell 2000 ETF (IWM) Responds
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.
Read full scenario analysis →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...
What to Watch For
- •Continuing claims rising above 2.0 million alongside Sahm exceeding 1.0
- •Unemployment rate rising above 4.5% with Sahm-rule acceleration
- •Initial claims above 300,000 weekly confirming layoff acceleration
- •Fed shifting to 50 bp cuts or inter-meeting actions
- •Job openings (JOLTS) falling below nonfarm payrolls level
Other Assets When the Sahm Rule Exceeds 1.0
Other Scenarios Affecting Russell 2000 ETF (IWM)
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