Fair. "Predicted" is probably the wrong word. Indicated. Qualified. Guess that's part of the problem, is a recession just when you have two quarters of real GDP contraction or is it something broader/different. Does it even matter? All great questions!
It is a backtested model, with an n of 11. It’s a joke. Ultimate correlation without causation, and overfitting. There are a billion other variables that could be backtested to correlate with 11 instances. You don’t have a rule that has NEVER forecasted a single time in advance. Not a serious tool for serious people.
Which recession(s) exactly has the Sahm “Rule” predicted exactly?
Fair. "Predicted" is probably the wrong word. Indicated. Qualified. Guess that's part of the problem, is a recession just when you have two quarters of real GDP contraction or is it something broader/different. Does it even matter? All great questions!
The answer is none, never.
It is a backtested model, with an n of 11. It’s a joke. Ultimate correlation without causation, and overfitting. There are a billion other variables that could be backtested to correlate with 11 instances. You don’t have a rule that has NEVER forecasted a single time in advance. Not a serious tool for serious people.
Did you see the part where I said you could replace it with a 12m change?
Yeah. So it’s not a “rule.” It’s made up fungible BS that has no predictive value.