The U.S. unemployment rate increased to 4.1% in June, up from 4% in the previous month, raising concerns of a potential recession. According to the Sahm Rule, a half-percentage point rise in the jobless rate over three months could signal the start of a recession, as it has accurately predicted every recession since 1970. Despite the current low unemployment rate, the widening gap between the actual rate and the threshold set by the rule indicates a possible economic downturn. Economist Claudia Sahm, who created the rule, warns that a rising unemployment rate can trigger a negative feedback loop leading to a recession. The Federal Reserve's decision to hold off on rate cuts has been criticized, with concerns that it could push the economy towards a recession. However, Wall Street remains optimistic about the economy, citing the AI boom and increased infrastructure spending as factors driving investment and earnings growth.