The San Francisco Fed offers new methods to monitor the state of the U.S. economy during recessions

ChainCatcher news, researchers at the San Francisco Fed have proposed a new recession warning indicator, providing economists with more tools to assess whether the U.S. may fall into recession. This tool, called the Labor Market Stress Indicator (LMSI), reveals regional differences in the labor market by statistically counting the number of states where the unemployment rate has risen at least 0.5 percentage points from its lowest level in the past 12 months.

The research report states: "Whenever 30 or more states experience a simultaneous acceleration in rising unemployment rates, the national economy almost always falls into recession. The LMSI method is transparent—only counting states with accelerating unemployment rates—easy to interpret, and provides valuable insights into the geographic distribution of economic stress."