What Happens to Credit Card Delinquency Rate When the Sahm Rule Triggers?
What happens when the Sahm Rule recession indicator triggers? Every historical instance, market impacts, and what it means for your portfolio.
How Credit Card Delinquency Rate Responds
Scenario Background
The Sahm Rule, developed by economist Claudia Sahm, triggers when the three-month moving average of the national unemployment rate rises by 0.50 percentage points or more relative to its low over the prior 12 months. It is designed to identify the start of a recession in real time, addressing the problem that official recession dating by the NBER often comes many months after a recession has already begun.
Read full scenario analysis →Historical Context
The Sahm Rule triggered before or at the start of every US recession since 1970: 1970, 1974, 1980, 1981, 1990, 2001, 2008, and 2020. In the 2008 crisis, it triggered in early 2008,months before Lehman Brothers collapsed and before most observers acknowledged the recession. In 2020, it triggered in April as the pandemic shutdown obliterated the labor market. The indicator briefly crossed the 0.5% threshold in late 2024 amid a labor market normalization that did not lead to a recession, sparking d...
What to Watch For
- •Initial jobless claims trending above 250K for multiple weeks
- •Continuing claims rising above prior-year levels
- •Hiring rate (JOLTS) declining below 3.5%
- •Temporary employment declining, a leading indicator of broader layoffs
- •State-level unemployment triggers confirming the national trend
Other Assets When the Sahm Rule Triggers
Other Scenarios Affecting Credit Card Delinquency Rate
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