Recession Risk 34/100 — August 13, 2026

Recession Risk Score: 34/100 — MODERATE (-3 vs 30 days ago)

Today’s Recession Risk Score is 34/100 (MODERATE), down 3 points vs. 30 days ago (37 → 34). The near-term (90-day) macro picture still reads as cooling, not cracking: layoffs remain contained, credit is easy, and the yield curve has normalized. The counterweight is that several cycle-leading internals—especially temporary help, household saving, and goods-transport proxies—continue to flash late-cycle fragility. Net: the economy can likely muddle through the next quarter unless the hiring slowdown turns into a sustained deterioration in claims and continued claims.

Score Trend — Last 30 Days

Over the past 30 days (window 2026-07-14 → 2026-08-13), the score drifted from 37 to 34 (Δ -3), with a min of 34, max of 44, and an average of 37. The distribution tells the story: recession risk hasn’t been steadily rising; instead it has spiked on specific stress pulses (peaks near 44) and then mean-reverted toward the mid-30s.

The last 10 readings show that “two-step” pattern clearly: 38/38 → 34 → 37/38/38 → 42 → 38 → 34/34. The sharp pop to 42 on Aug 10 reads like a brief risk flare (likely tied to macro/market recalibration after the early-August labor-market downside surprise), but the quick return to 34 suggests no broad, persistent tightening across labor + credit + liquidity simultaneously—still the hallmark of an imminent recession call.

Key Drivers

1. Layoffs remain historically low (still a “SAFE” labor market stress signal)

   • Initial jobless claims: 199k (week ending Aug 1, reported Aug 6), a level consistent with limited layoffs. (apnews.com)
   • This is why the score can fall even while hiring momentum wobbles: recession typically requires layoffs to trend up, not just hiring to cool.

2. Hiring impulse is wobbling, but the recession trigger framework is not

   • July payrolls reportedly fell -23k, with notable caveats around local education seasonals and revisions. (apnews.com)
   • Sahm Rule: -0.03 (SAFE)—unemployment drift is not yet recessionary in the “trigger” sense.

3. Curve re-steepening is a late-cycle signal—not a 90-day recession timer

   • 2s10s: +0.48 (WATCH): a normalized curve generally reduces “immediate” recession probability, even if history says steepening after inversion can occur late-cycle.

4. Credit remains loose; spreads aren’t corroborating recession risk

   • HY OAS: 271 bps (SAFE)—still tight, still signaling risk-on default pricing rather than funding stress. (convextrade.com)
   • The “credit confirmation” that usually accompanies recessions (rapid, sustained spread widening) is simply absent.

5. Inflation is easing at the margin, giving the Fed room to stay patient

   • July CPI: +0.1% m/m, 3.4% y/y (down from 3.5% y/y), extending the “second month of relief” narrative. (axios.com)
   • This matters for recession risk because it reduces the probability of a renewed hawkish policy shock.

6. Cycle-leading household + goods signals remain concerning

   • Personal savings rate: 2.7% (DANGER)—low savings increases downside convexity if labor income slows.
   • Freight Transportation Index: -1.3 (DANGER)—goods-side throughput continues to imply weakness beneath headline growth.

Category Breakdown

Using today’s category counts:

• Primary Indicators: 3 safe / 5 watch / 1 danger
  Broadly mixed. The “primary” set is not screaming recession, but it is fragile: one more step down in hiring (or up in unemployment) would shift this bucket quickly.

• Secondary Indicators: 2 safe / 0 watch / 1 danger
  Secondary is still mostly constructive, but the single danger flag is a reminder that internals are deteriorating even as headline aggregates hold.

• Housing & Construction: 0 safe / 1 watch / 1 danger
  Housing is not an engine here. Permits below trend keep recession odds “sticky” because housing tends to lead turns.

• Business Activity: 2 safe / 1 watch / 0 danger
  Business activity is still in the “growth” zone on balance—consistent with a slowdown, not a contraction.

• Consumer Credit Stress: 1 safe / 2 watch / 1 danger
  This is where vulnerability is building: delinquencies and debt service are not crisis, but they are drifting the wrong way as savings compress.

• Market Signals: 6 safe / 3 watch / 5 danger
  Markets are internally contradictory: equity levels/VIX/conditions are calm, while valuation and some macro ratios flash “late-cycle excess.”

• Liquidity: 0 safe / 1 watch / 2 danger
  Liquidity is a yellow-to-orange area: the system looks fine until it doesn’t, especially if bank balance-sheet marks matter.

• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
  Real-time is split: claims say “fine,” but high-frequency goods/transport says “soft.”

Biggest Movers

Top 5 by absolute 7-day % change:

1. ON RRP Facility ($1B): +113.7% (7D) (but -97.4% 1D)

   • Contradictory / mixed: small absolute level signals the facility is effectively depleted, which can matter for plumbing, but it’s not automatically recessionary without broader funding stress.

2. NY Fed Recession Probability (0.8%): +68.6% (7D)

   • Confirmatory (worsening risk) on direction, but note: the absolute level is still low in the context of typical recession-probability regimes. Treat as “rising from low,” not “high.”

3. Freight Transportation Index (-1.3): -66.7% (7D)

   • Confirmatory (worsening risk): a sharp deterioration in goods flow proxies tends to align with late-cycle downshifts.

4. Personal Savings Rate (2.7%): -27.8% (7D)

   • Confirmatory (worsening risk): lower savings reduces the consumer’s buffer, making the economy more sensitive to labor-market downside.

5. GDP Growth (QoQ ann.) (1.5%): -20.0% (7D)

   • Confirmatory (worsening risk): growth expectations are ratcheting down, consistent with “slowdown” dynamics.

90-Day Indicator Trends

The 90-day panel you provided contains many series that are flat-lined for long stretches (suggesting infrequent updates), but it still reveals useful direction-of-travel comparisons.

Labor & employment internals

• Initial claims improved from 211k (May 15) to 215k by early June in your history, and today’s headline is 199k (Aug 1 week) — still low and not trending like a recession onset. (apnews.com)
• Unemployment rate in your history sits around 4.3% (May/June), while today is 4.1% (WATCH)—a modest improvement on the headline, but the hiring backdrop is weaker given July payrolls -23k. (apnews.com)
• Temporary help services: 2505k (DANGER)—this is the most important labor internal. Temp help tends to roll over early as firms “de-risk” staffing before broader layoffs. The persistence of the danger signal here is a key reason the score is MODERATE rather than LOW.

Activity & manufacturing

• Industrial production moved from roughly 101.8–102.5 (mid-May/early June) to 102.6 today (SAFE)—a mild upshift, consistent with ongoing expansion.
• ISM Manufacturing: your narrative references June PMI 53.3, consistent with expansion; ISM’s June report confirms 53.3 and highlights the employment subindex below 50 (49.7), aligning with labor softening. (ismworld.org)

Housing

• Building permits bounced in the history from 1363k (May 15) up to ~1423–1442k (late May/early June), but today’s reading 1374k (WARNING) implies permitting has slipped back below trend.
• Housing starts stepped down from ~1502k (mid-May) to ~1465k (early June), and today is 1427k (WATCH)—a gradual deceleration consistent with “late-cycle housing drag.”

Financial conditions, risk, and credit

• NFCI stayed around -0.52 to -0.49 in the history (loose). Today: -0.53 (SAFE)—financial conditions remain supportive.
• HY OAS oscillated in your history around 271–286 bps with a brief 320 bps blip; today is 271 bps—tight again, consistent with risk appetite. (convextrade.com)
• VIX declined from ~17–18 to the 15–16 zone in the history, and today is 15.5 (SAFE)—equity vol is pricing calm, not stress.

Consumer buffer indicators

• Personal savings rate in your history fell from 3.6% (warning) to 2.6% (danger) by late May/early June; today’s 2.7% (danger) is only a slight improvement and still “tapped-out consumer” territory.
• Credit-card delinquency held near 2.9% in the history and remains 2.9% (WATCH) today—elevated but not accelerating sharply in the provided window.

Bottom line on the 90-day arc: real-economy aggregates (production, PMI) look OK, labor stress (claims) is OK, and credit is OK—yet the leading-edge warning system (temp help, saving, freight, housing permits) is deteriorating. That combination is textbook slowdown-with-tail-risk rather than “recession is imminent.”

Stock Screener Signals

Today’s quant screen is dominated by value + dividend flags: ARCC, AIG, BBY, FNF, HMC, T, LTM, BCE—with two “oversold growth” names (CHTR, TLK) mixed in. The macro read-through is straightforward: the market is increasingly attracted to cash-flow visibility and payout profiles even while the index level is near highs—classic late-cycle positioning.

Two notable interpretations:

1. Defensive carry / income preference is rising. Even if some yields shown are clearly distorted (data-quality issues in the screener output), the clustering in “value dividend” suggests a preference for carry over long-duration optimism. That aligns with your broader signal mix: calm financial conditions, but investors want a margin of safety.
2. Selective mean reversion rather than broad risk-off. “Oversold growth” flags (e.g., CHTR RSI 28, TLK RSI 30) imply pockets of drawdown inside a strong index tape—consistent with rotation rather than recession pricing.

In recessionary setups, screens typically shift toward balance-sheet defense and away from cyclicals altogether. Here, the mix looks more like late-cycle rotation and valuation discipline, not “credit-event panic.”

Latest Economic Developments

Inflation: The latest CPI print (released Wednesday, Aug 12, 2026) showed headline CPI +0.1% m/m and 3.4% y/y, down from 3.5% y/y. (axios.com) The report reinforces the idea that the earlier energy shock is fading and that inflation isn’t re-accelerating in a way that forces imminent tightening.

Labor market: The July jobs report was the macro shock of the month: payrolls reportedly fell by 23,000 (first negative month since February), with substantial noise from local government education and significant downward revisions to prior months in some coverage. (apnews.com) This is the main “risk wedge” right now: if payroll weakness persists into the next 1–2 reports, risk will rise quickly.

Layoffs / claims: Despite payroll weakness, weekly claims remain low. The Aug 6 report cited filings of 199,000 for the week ending Aug 1, keeping the “layoff regime” benign. (apnews.com) This divergence—weak hiring but low layoffs—is consistent with slowdown scenarios where firms pause net hiring but do not yet cut aggressively.

Manufacturing: ISM’s June manufacturing PMI at 53.3 confirms expansion, but the employment subindex below 50 supports the view that labor demand is softening inside industry. (ismworld.org)

Near-Term Outlook (Next 30 Days)

The next month is likely to be data-dominant, with the risk score hinging on whether the labor-market softness broadens from hiring to layoffs.

Base case (most likely): risk holds in the low-to-mid 30s (MODERATE) as:

• Inflation remains contained enough to keep policy patient after the July CPI relief. (axios.com)
• Credit spreads stay tight unless a catalyst forces repricing. (ycharts.com)
• Claims remain anchored near ~200k (no regime shift).

What would push the score up sharply:

• A sustained uptrend in initial claims and (especially) continued claims over multiple weekly prints.
• Another negative or near-zero payroll print (confirming the July weakness wasn’t seasonal noise). (axios.com)
• Abrupt HY spread widening from the high-200s toward stress thresholds (e.g., >400–500 bps) that historically confirm tightening.

What could push the score down:

• Payrolls rebound back into consistent positive territory while claims remain low—i.e., the July print is “explained away” by seasonals/revisions.
• Housing permits stabilize and consumer buffers stop deteriorating (savings rate stops falling).

Long-Term Outlook (3-6 Months)

The 3–6 month outlook remains asymmetric: the modal outcome is continued slowdown, but tail risk rises because the consumer and fiscal backdrop provide less shock absorption than in earlier-cycle phases.

Three structural themes matter most:

1. Labor-market inflection risk is rising. Temp help is already flashing danger, and ISM employment is soft. That combination often precedes broader employment weakening by a few months—meaning the labor “shield” can disappear quickly once it turns.
2. Consumer buffer is thin. A low savings rate means consumption can remain resilient only as long as labor income remains steady. If unemployment rises meaningfully, the adjustment can be nonlinear.
3. Financial conditions can stay loose—until they can’t. Tight HY spreads and a low VIX are supportive now, but late-cycle markets can reprice suddenly if growth disappoints or if a funding/balance-sheet issue emerges.

Historical parallel (pattern, not prophecy): many late-cycle periods show re-steepening curves + tight credit before the eventual downturn. The key difference-maker is whether the labor market transitions from “slow hiring” to “rising layoffs.” Your current data says we’re not there yet.

What to Watch

Labor (highest priority)

• Initial claims: watch for a sustained move meaningfully above the ~200k regime.
• Continued claims / insured unemployment: confirmation of duration rising.
• Next payroll reports: does July’s -23k repeat, or bounce? (apnews.com)

Business cycle leaders

• Temporary help services: further declines would strengthen the recession-leading signal.
• ISM employment & new orders: continued sub-50 employment and a rollover in new orders would tighten the case.

Housing

• Building permits: if permits remain below trend and starts keep drifting down, housing will remain a drag.

Credit and liquidity

• HY OAS: confirmation threshold is sustained widening out of the 270–300 bps range. (ycharts.com)
• Bank unrealized losses / liquidity plumbing: watch for any signs that balance-sheet constraints begin to feed into credit availability.

Inflation / policy

• Follow-through after CPI 3.4% y/y: if inflation continues easing, the Fed can stay patient; if it re-accelerates, policy risk returns. (axios.com)

Sources

No data available for this window.