The San Francisco Federal Reserve offers a new way to monitor the U.S. economic downturn

Researchers at the San Francisco Federal Reserve have proposed a new recession warning indicator that gives economists more tools to assess whether the US is likely to fall into recession. The tool, known as the Labor Market Stress Indicator (LMSI), reveals regional differences in the labour market by counting the number of states where unemployment has risen by at least half a percentage point from the lowest level in the past 12 months. "Every time 30 or more states experience an accelerating unemployment rate at the same time, the national economy almost always falls into recession," the study notes. The LMSI methodology is transparent - counting only states where unemployment has accelerated - easy to interpret and provides valuable insights into the geographical distribution of economic stress. "