Relatively positive outlook for 2026, says New Century Advisors' Sahm

Claudia Sahm (Chief Economist) 00:00.680

Yeah, that's a good question. It's It is unusual, you know, when we've we saw the unemployment rate really started moving up pretty steadily in the summer, and you know, that lines up exactly with a period where we saw, you know, consumer spending third quarter growth really,

Claudia Sahm (Chief Economist) 00:14.600

you know, topping the charts. And that that is not typical to see those two line up. Of course, timing is always pretty tough. Now, I will, one special factor that is a play this year is we we have had a pretty substantial downsizing of the federal government. It is not enough,

Claudia Sahm (Chief Economist) 00:32.040

you know, the layoffs in the federal government or the the downsizing, which is almost about 300,000 less in employment, which has happened very rapidly, that is nowhere near enough to explain the increase in unemployment. We're almost close to adding a million people to the

Claudia Sahm (Chief Economist) 00:45.000

unemployment roles, but it is a policy decision. It's not a cyclical weakening. Usually when we look at these small increases in the unemployment rate as being, you know, bad news, it's because Yeah it's the start of a cycle that's gaining speed and that's really talking about a

Claudia Sahm (Chief Economist) 01:04.280

business cycle. That's not talking about a policy decision to change the size of the federal government, which largely those reductions in force have taken place. So, I think we're kind of adding some extra noise to it. I'm not as concerned about it yet, but it is absolutely

Claudia Sahm (Chief Economist) 01:14.560

something to be watching.