The Augusta Metropolitan Statistical Area economy is in a recession, according to one indicator. The Sahm indicator hit 0.6 in August and a reading higher than 0.5 indicates a recession. The Sahm indicator is named after its creator, Claudia Sahm. The Sahm Recession Indicator signals the start of a recession when the three-month moving average of the unemployment rate rises by 0.50 percentage points or more relative to the minimum of the three-month averages from the previous 12 months. In August, the local unemployment rate rose to 4.4 percent for a three-month moving average of 4.2 percent. The minimum of the three-month averages from the previous twelve months is 3.6 percent.
An unemployment rate of 4.4 percent is still low by historical comparison. The average unemployment rate in the Augusta MSA over the past 35 years is 6.1 percent. Most economists thought, until recently, that an unemployment rate of about 6 percent was the natural rate of unemployment. However, it is concerning that the unemployment rate has increased for five consecutive months from March, when it was 3.6 percent. In August, there were 14,222 unemployed persons in the MSA, the highest level since August 2020.
This news seems at odds with last week’s report of record employment. The contradiction can be explained by looking at the labor force (those employed and unemployed). The labor force has grown steadily since January after declining for most of 2023. Almost 5,000 workers have been added to the workforce since January. While some have found jobs, employment is up about 2,000 since January, some are still looking. So a rising unemployment rate may not be as bad news as first thought.
