This paper argues that in the United States the full-employment rate of unemployment (FERU) is the geometric average of the unemployment and vacancy rates. Between 1930 and 2024, the FERU averages 4.1% and is very stable.
This note combines unemployment and job vacancy data to build a new Sahm-type recession rule. The rule shows that the US economy may have entered a recession as early as March 2024. In August 2024, the probability that the US economy is in a recession is 48%.
This paper proposes a matching model of the labor market with job rationing: unemployment does not disappear in the absence of matching frictions. In recessions, job rationing drives the rise of unemployment, whereas matching frictions contribute little to it.