Economist: U.S. unemployment rate rises unexpectedly, increasing likelihood of recession

The U.S. unemployment rate unexpectedly rose to 3.9% from 3.7% in February, raising concerns among economist and strategist David Rosenberg that a sudden recession could hit the U.S. economy. "The unemployment rate is now 0.5 percentage points higher than the cycle low in January 2023, which undermines the soft landing narrative, because once the unemployment rate rises this much from the low, a recession is likely to come," Rosenberg said. Previous Sam's Law proposed by Federal Reserve economist Claudia Sahm shows that when the moving average of the three-month unemployment rate in the United States, minus the low unemployment rate in the previous 12 months, exceeds 0.5%, the economic recession begins. This situation is consistent with all recessionary stages. By that rule, it's currently 0.27 percentage points above a one-year low, so the unemployment rate must continue to move higher to trigger recession indicators.