[New Year Interview] Who is Dr. Sam? The Star Economist Who Created the 'Sam's Law'

Dr. Claudia Sahm, an expert in macroeconomics and household finance, is well known for creating the 'Sahm’s rule,' which detects whether the U.S. economy is entering a recession. She has worked at the Federal Reserve (Fed), the Brookings Institution, and the Economic Advisory Council of the Barack Obama administration, focusing on macroeconomic research related to business cycles, fiscal stimulus, and consumer behavior. After revealing Sahm’s rule in 2019, she left the Fed, where she had worked for over a decade, and has been running SAHM (Stay-at-Home Macro) consulting since 2020.

Dr. Claudia Sam [Image provided by Claudia Sam]

Sahm’s rule, devised by Dr. Sahm, identifies a sudden recession when the three-month moving average of the unemployment rate rises by 0.5 percentage points compared to the lowest point in the past 12 months. This rule has been validated in all past recessions since the 1970s, including the global financial crisis. Additionally, this figure drew Wall Street’s attention again last October when it jumped to 0.33 percentage points amid coexistence of recession fears and expectations of a soft landing.

However, in this recent interview, Dr. Sahm expressed some surprise that Sahm’s rule, bearing her name, has been regarded as a kind of recession prediction indicator in recent years, which differs from her original intent. Known as a consumer spending expert, she focused on how to implement effective fiscal stimulus during downturns while working on stimulus and broad tax credit policies under the Bush and Obama administrations. She explained that she created this indicator to serve as a benchmark for implementing stimulus measures immediately when a recession begins.

Currently, through SAHM, which she founded, Dr. Sahm shares her economic outlook and analyses both for free and for a fee. Her insightful writings have been well received by readers. She stated, "My goal is to improve economic policy and macroeconomics." Dr. Sahm earned bachelor's degrees in economics, political science, and German from Denison University in Germany, and a Ph.D. in economics from the University of Michigan.

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