“I Just Don’t Have a Good Feeling About This”: Economist Claudia Sahm Warns the Economy Quietly Shifted — and Everyone’s Watching the Wrong Alarm

Renowned economist Claudia Sahm, best known for creating the Sahm Rule recession indicator, is raising a quiet but unsettling warning about the U.S. economy. While many analysts remain focused on familiar red flags such as inflation data, interest rates, or headline job numbers, Sahm argues that the economy has already shifted beneath the surface — and policymakers and investors may be paying attention to the wrong warning signs.

“I just don’t have a good feeling about this,” Sahm recently said, reflecting growing unease among economists who believe traditional indicators may be lagging behind today’s economic realities.




Who Is Claudia Sahm — and Why Her Warning Matters

Claudia Sahm is a former Federal Reserve economist and a widely respected voice in macroeconomic policy. She gained prominence after developing the Sahm Rule, a simple but historically reliable method for identifying the start of recessions based on changes in unemployment.

Because her indicator has successfully flagged every U.S. recession since the 1970s without false positives, Sahm’s caution tends to carry weight — especially when she suggests that existing tools may no longer capture the full picture.

This time, her concern isn’t about a sudden crash. It’s about a slow, quiet economic shift that could catch both markets and households off guard.




The Economy Isn’t Breaking — It’s Bending

One of Sahm’s key points is that the economy doesn’t always collapse dramatically. Sometimes, it weakens gradually, masking deeper vulnerabilities.

On the surface, many economic indicators still appear relatively stable. Unemployment remains historically low, consumer spending has not collapsed, and inflation has cooled compared to recent peaks. These signals have reassured markets that the economy remains resilient.

But Sahm suggests this confidence may be misplaced.

She points to subtle changes: slower hiring, reduced job switching, shrinking savings buffers, and growing financial stress among middle- and lower-income households. These shifts may not trigger immediate alarms, but together they suggest the economy is losing momentum.




The “Wrong Alarm” Problem

According to Sahm, too much attention is being paid to headline data, while more meaningful stress signals are being overlooked.

For example, policymakers often focus on inflation rates or interest-rate policy as primary gauges of economic health. While important, these metrics don’t always reflect how households are actually coping.

Instead, Sahm highlights areas such as:

Declining labor market fluidity

Reduced hours worked rather than outright layoffs

Rising credit card and consumer debt balances

Slower real wage growth for non-high-income workers


These indicators suggest economic strain that doesn’t immediately show up in traditional recession models.




Why This Cycle Is Different

One reason existing alarms may be misleading is that this economic cycle is unlike previous ones.

The post-pandemic economy has been shaped by massive fiscal stimulus, rapid interest-rate hikes, supply chain disruptions, and shifting work patterns. As a result, old benchmarks may no longer behave the way economists expect.

Sahm argues that relying solely on historical patterns risks missing new forms of weakness. For instance, companies may avoid mass layoffs due to recent labor shortages, opting instead for hiring freezes or reduced hours — actions that still hurt workers but don’t trigger unemployment spikes.

This makes economic slowdowns harder to detect until the damage is already widespread.




Households Feeling the Pressure First

While macroeconomic indicators may appear stable, many households are already feeling the strain. Rising costs of housing, healthcare, and everyday essentials have eroded purchasing power, especially for those without substantial savings.

Pandemic-era financial cushions are thinning, and higher interest rates have made borrowing more expensive. For many families, even small disruptions — a job change, medical bill, or rent increase — now carry greater risk.

Sahm’s concern reflects this disconnect between official economic narratives and lived experiences. When confidence weakens quietly, consumer behavior can shift suddenly, accelerating downturns.




What Policymakers May Be Missing

Sahm’s warning also carries implications for policymakers. If leaders wait for clear recession signals before responding, they may act too late.

She has long advocated for automatic stabilizers, such as direct cash payments triggered by rising unemployment, to help households early in downturns. But if unemployment no longer rises quickly, those safeguards may fail to activate when needed.

This raises questions about whether economic policy tools are adequately designed for today’s more complex and uneven economy.




Not a Prediction — A Caution

Importantly, Sahm is not declaring that a recession is inevitable or imminent. Her message is more nuanced: the economy may already be shifting into a more fragile state, and complacency could prove costly.

Economic slowdowns often become obvious only in hindsight. By the time official data confirms trouble, businesses and families may already be struggling.

Her unease reflects a broader sentiment among economists who worry that optimism based on outdated signals could delay necessary action.




Conclusion: Listening to the Quiet Signals

Claudia Sahm’s warning isn’t about panic — it’s about awareness. When she says she doesn’t have a good feeling, she’s urging policymakers, investors, and the public to look beyond traditional alarms and pay attention to the quieter signs of stress.

The economy may not be flashing red yet, but it could be changing direction in ways that standard indicators fail to capture. If history has taught anything, it’s that the most dangerous shifts are often the ones that happen quietly — until suddenly, they don’t.