US Labor Market Approaching Recession Indicator
The U.S. job market is facing growing uncertainty as unemployment rises and economic warnings flash. In November, the unemployment rate reached 4.6%, edging closer to a key recession signal. Economists are now watching whether this trend will push the country into a downturn next year.
The latest figures show unemployment climbing steadily. A rate of 4.6% puts the economy near the Sahm Rule threshold—a recession indicator triggered when the three-month average unemployment rate jumps by 0.5 percentage points from its lowest point in the past year. If the rate stays at 4.6% in December, the rule will be activated, raising recession fears.
Moody’s Analytics currently places the chance of a U.S. recession in 2025 at 40%. Their outlook assumes that sluggish labour demand and AI-driven productivity shifts will continue. While AI’s impact on jobs has been limited so far, wider adoption could soon lead to more automation and job cuts. Mark Zandi, Chief Economist at Moody’s Analytics, has highlighted weakening labour demand as a major concern. Restrictive immigration policies and rising automation are squeezing the job market further. The combined effect of these factors is deepening worries about an economic slowdown.
The U.S. economy now stands at a critical point. A sustained rise in unemployment could confirm recession risks, while AI’s expanding role may reshape productivity and employment. The coming months will reveal whether these pressures push the country into a full downturn.
