The highly anticipated jobs report info is expected to be released on Friday, providing investors with another important prices sign to gauge the likelihood of the Federal Reserve cutting interest rates. Josh Schafer from Yahoo Finance joins the Life Show to discuss the SAHM principle and how immigration affects unemployment rates in different states.
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Editor’s note: This article was written by Angel Smith
Video Transcript
– Friday’s work review, of course, which may serve as another significant indication to the Fed, will be the highlight of this first year or the next quarter. And before the data for this week’s week, we are now beginning to see some states flash warning signs as the economy rises or, as some might say, the Sahm law. Yahoo Finance’s Josh Schafer joins us now for more. Joshua.
JOSH SCHAFER: Yes. But we’ve had some economists use the Sahm rule, which states that if we follow the Sahm rule, it is typically a regional crisis sign. Therefore, the Sahm rule would need to work to become effective after three months of rolling poverty, which would have increased by more than 0.5 %. What’s happening here is that it’s happening in state. So it’s happening in 20 says straight now.
This is outlined by UBS’s Economics staff. And what they said was that largely, you ca n’t use this as a real recession indicator, but what they learned was that it might be indicating that the economy is n’t as strong as we think in some parts of the nation. What I found to be the most intriguing was when I inquired about these results and what she might have discovered from them from Claudia Sahm, the rule’s leader.
And she said, largely, she does n’t really think this is an effective practice because the 0.5 % sort of trigger line in the Sahm rule, in the traditional Sahm rule that she highlighted, should n’t be worked with that in the national level. So it just does n’t really work when you apply that to states and consider states where seasonality– workers come in during the summer– and other factors.
After this study was published, she attempted it herself, calling it a bit tiresome. And she was n’t entirely sure how to attack it state by state. However, what she did discover was the rise in immigration that is occurring at a regional level, which is perhaps the most intriguing aspect of this brief training. And that’s something that has been cited by some. We recently reported a rise in the unemployment rate of 3.9 %. There has been a lot of discussion about the rise in multiculturalism.
And portion of what you’re seeing here is that you can see emigration increasing the overall US labor force. If they do n’t get work immediately, then your unemployment rate goes up. We’re also seeing that at the state levels. The three biggest says are California, New Jersey, and New York, as Carolia pointed out when we go back to that table where we show states with higher unemployment rates. Those are even three of the biggest states in terms of emigration.
Those state are also hiring a lot of people. And in some, that might be a contributing factor to why their poverty rate is rising. And the kicker here would be if that’s happening, and we’re getting more staff, that likely means that source would come up, and overall, the business was truly grow more than expected if you roll that all the way through. That’s something economists are thinking about, this increase in immigration, is it really could be a good point.
Never to get that great picture and simply declare that everything is a positive thing. Of course, there are signs of weakness within that. However, this may have some complexity that I found to be rather intriguing.
– And it will be interesting to see if some of that immigration reaches the state with more job opportunities. But I suppose we’ll just have to wait and see.
JOSH SCHAFER: Yeah, that was– correctly. That was the various component of it. And Claudia claimed that because they typically find immigrants moving there, another immigrants are, so much of it is concentrated in particular states. However, we might find ourselves in better balance if we were to see them leave and move to a place with more option or imbalance in supply and demand, as we frequently discuss in the labour market.
– It might do that. Thanks so little, Josh. Appreciate it.
