Lots More with Claudia Sahm

Tracy Alloway (0:00)

I was just saying to Joe, I'm annoyed that we didn't go to the Freight Waves Conference this year because they had a puppy playpen, just like a bunch of puppies at this conference. And we went last year and they did not have puppies.

Claudia Sahm (0:14)

Yeah, no, we had some work thing. The one, there's a board group that's over in International Square, which is not in the Fed complex. And they did, they had a day where they had all this stuff for the people in the building, and one was a puppy playpen.

Joe Weisenthal (0:28)

So this is a new thing, adults need like puppy playpens at events to be entertained. Sorry.

Tracy Alloway (0:34)

Why not? Wait, food trucks and puppies, preferably ones that are up for adoption, you know, from animal shelters, and you have the complete, the ideal conference, in my opinion.

Joe Weisenthal (0:47)

I did a deadlift. One, two, three.

Tracy Alloway (0:52)

Gemini.

Joe Weisenthal (0:52)

Barges.

Tracy Alloway (0:54)

This is an after school special, except I've decided I'm going to base my entire personality going forward on campaigning for a strategic pork reserve in the US.

Joe Weisenthal (1:02)

Where's the best squid ink pasta?

Tracy Alloway (1:04)

These are the important questions. Is it robots taking over the world?

Joe Weisenthal (1:07)

No, I think that like in a couple years, the AI will do a really good job of making the odd lots podcast and people say, I don't really need to listen to Joe and Tracy anymore. We do have the perfect guest.

Tracy Alloway (1:22)

Well, in the meantime, this is Lots More.

Joe Weisenthal (1:25)

A weekly chat about whatever is on our minds.

Tracy Alloway (1:31)

We are speaking with Claudia Sahm, the former Fed economist who now has her own consultancy, Sahm Consulting.

Claudia, it's good to talk again. It's been a while.

Claudia Sahm (1:42)

Yeah, no, it's great to be on. I really appreciate it.

Tracy Alloway (1:44)

I have a really important question, which is, do you get tired of having to convince people that you do in fact know how the Sahm rule actually works? The rule that's named after you.

Claudia Sahm (1:55)

Yeah, no, men are fascinating.

It's interesting. I have people that ask me, they can't quite match it, so they email me very politely, because details matter, right? Exactly what average you're taking and stuff. But the people who try to explain to me that I've calculated it wrong, and then get really really not happy with me when I don't agree with them, and it's just anyway, so that's I guess just part of, I mean, I'm glad they're touching data, they clearly don't know what to do with it, but it's good.

Joe Weisenthal (2:28)

Can we run a Bloomberg headline, Sahm, colon, men are fascinating. I think that could be one of those Bloomberg red headlines, I think that goes across the wire when this comes out.

Claudia Sahm (2:38)

Yeah, you should ask my editor Bob Burgess, Bloomberg opinion, if I can write that piece. I'm not sure he'll greenlight that one.

Tracy Alloway (2:44)

I bet we could get that commission.

Joe Weisenthal (2:47)

You know, a lot of our listeners started listening to us in sort of like 2020, the pandemic era, but we've we had Claudia on, I think in January or February 2020, before COVID had just sort of talking theoretically about this idea of, okay, what are these indicators of recession, etc.

And then it was literally six weeks later, and we're like, oh, but we were talking about theoretically six weeks ago, and now we have to talk about real. So here we are. I don't think we've had you. I don't think we've chatted with you since then, though.

Claudia Sahm (3:19)

Yeah, no, I show up when the world is craning towards the cliff. So I, you know, I'm happy to be helpful and, you know, we can do good policy, we can do it better. And yet it is not cheerful when I start getting press calls.

Lots of press calls.

Tracy Alloway (3:35)

I remember, though, that was actually an incredibly prescient conversation in many ways, because we did talk about the Sahm rule, and we should maybe mention on this podcast what exactly it is. But the whole idea of the Sahm rule was that it would be an early indicator of recession so that policymakers would be able to actually start doing something about, you know, impending economic contraction. And I think people kind of forget about that now.

Claudia Sahm (4:04)

Right.

Like you said, the Sahm rule is a recession indicator. So it doesn't forecast a recession, but very early in a recession, way before, like the NBER would call the recession, way before we'd even have a lot of information on GDP, this unemployment rate should tell us we're in a recession. Let's get going. And there are certain things that Congress does in almost every recession, though I'm not holding my breath if one comes soon, with sending out stimulus checks, enhancing unemployment benefits, maybe getting money to communities.