The Sahm Rule is a quick way to spot when a recession has started. - It looks at the **unemployment rate**. - If the **3-month average unemployment rate** rises by **0.5 percentage points or more** above its lowest level in the past year, the rule is triggered. **Why it matters:** Every time this has happened since World War II, the U.S. has already been in a recession. There have been no false signals. **Example:** If unemployment was 3.5% at its low, and the 3-month average rises to 4.0% or higher, the Sahm Rule says a recession is underway.