Recession Risk 37/100 — August 15, 2026

Recession Risk Score: 37/100 — MODERATE (+3 vs 30 days ago)

Today’s Recession Risk Score is 37/100 (MODERATE), up +3 points versus 30 days ago (from 34 on July 16, 2026 to 37 on August 15, 2026). The dashboard is still not pricing an imminent recession because the highest-signal labor triggers remain contained (Sahm Rule untriggered; claims low) and financial conditions are loose. But the balance of evidence has shifted: late-cycle “soft” data (sentiment) is deteriorating again while goods/transport is weakening, raising the odds of a growth scare rather than a clean re-acceleration.

Score Trend — Last 30 Days

Over the last 30 days (July 16 → August 15, 2026), the score ended higher (37) after starting at 34, with a wide intra-month range (min 34, max 44, avg 37). The shape is best described as unstable but not yet trending—sharp spikes followed by quick mean reversion.

The key tell is the mid-window flare-up: the score jumped to 42 on August 10 (near the 44 peak for the window) before falling back to 34 on August 12–13, then settling at 38 on August 14 and 37 today. That pattern typically signals fragile confidence: risk is being repriced rapidly on incremental data (especially labor and confidence), but the core “hard” macro scaffolding still keeps recession risk capped.

Key Drivers

1) Labor-market recession triggers remain quiet (core offset to risk).

• Sahm Rule: -0.03 (SAFE) today, and in your 90-day window it eased from 0.13 (May 17) to 0.10 (June 6)—nowhere near the 0.50 trigger.
• Initial jobless claims: 209K (SAFE)—still consistent with a healthy labor market, even if the recent prints have edged higher (e.g., 225K shows up in your history window).

2) Financial conditions remain loose (NFCI still supportive).

• Chicago Fed NFCI: -0.55 (SAFE) today; your 90-day history shows NFCI moving from about -0.52 toward -0.49 by early June—still “easy,” not restrictive.
  Loose conditions are a recession suppressant because they keep asset prices buoyant, borrowing channels open, and default cycles delayed.

3) The yield curve is positive (removes a classic near-term recession pressure point).

• 2s10s: +0.51 (SAFE) today, and it stayed positive across your 90-day history (drifting down to ~0.38 by June 6, but not inverting).
• 2s30s: 1.06 (WATCH) today—steepening can sometimes accompany “Fed-cut” expectations later, but it’s not a standalone recession call.

4) Confidence is a flashing red light again (soft data worsening).

• Your dashboard flags UMich sentiment: 49.5 (DANGER)—crisis-level pessimism.
• The latest preliminary August coverage in the past 48 hours highlights renewed souring in sentiment after prior improvement. (axios.com)
  In late-cycle regimes, collapsing confidence doesn’t cause recession by itself, but it often correlates with discretionary pullbacks that can hit retail, travel, and durable goods.

5) Real growth is slowing but positive (slower expansion, not contraction).

• BEA’s Q2 2026 real GDP: +1.5% SAAR (advance estimate) confirms below-trend growth, down from +2.1% in Q1. (bea.gov)
• Next GDP release timing matters: Q2 “second estimate” is scheduled for August 26, 2026—a near-term catalyst for repricing. (bea.gov)

6) Goods/transport is deteriorating (harder cyclicals weakening).

• Freight Transportation Index: -1.3 (DANGER) is your clearest “real economy” warning—goods flow softness tends to show up before broad service employment cracks.
  When freight is down while equities are near highs, it often reads like a two-speed economy: AI/mega-cap strength masking cyclical deterioration.

Category Breakdown

Using your CATEGORY BREAKDOWN counts:

• Primary Indicators: 4 safe / 4 watch / 1 danger — Mixed but not recessionary; the “primary” set is leaning late-cycle (watches rising) rather than outright contraction.
• Secondary Indicators: 2 safe / 0 watch / 1 danger — Mostly stable; the danger print here matters mainly if it begins to cluster with primary deterioration.
• Housing & Construction: 0 safe / 1 watch / 1 danger — Housing is no longer a clear growth engine; permits/starts softness keeps the cycle vulnerable.
• Business Activity: 2 safe / 1 watch / 0 danger — Business activity is holding up on the surface, but “watch” implies momentum is fading rather than improving.
• Consumer Credit Stress: 1 safe / 2 watch / 1 danger — Credit stress is not blowing out, but it’s creeping (delinquencies and debt service flagged), a classic late-cycle development.
• Market Signals: 7 safe / 2 watch / 5 danger — This is the most internally contradictory cluster: indices near highs and vol low, but valuation/GDP ratios and commodity fear signals are extreme.
• Liquidity: 0 safe / 1 watch / 2 danger — Liquidity is the quiet risk: ON RRP depletion and fiscal/interest-expense warnings imply less shock-absorption capacity.
• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger — The real-time set is splitting: claims look fine, but faster-moving cyclical data (temps/freight) is not.

Biggest Movers

From your BIGGEST MOVERS (|7-day % change|) list:

1. Freight Transportation Index: -66.7% (7D) — Confirmatory (worsening risk).
   A collapse in freight is consistent with a goods-side slowdown and usually precedes weaker industrial hiring and capex caution.

2. ON RRP Facility: -58.9% (7D) — Confirmatory (worsening risk via liquidity).
   The drawdown suggests less excess cash parked at the Fed, which can tighten marginal liquidity if not offset elsewhere.

3. Personal Savings Rate: -27.8% (7D) — Confirmatory (worsening risk).
   A savings rate at 2.7% (DANGER) implies consumers are less resilient to shocks (job loss, higher debt service, or inflation surprises).

4. Sahm Rule: -23.1% (7D) — Contradictory (improving risk).
   This is the most important good move: it indicates the unemployment-rate dynamics are not accelerating into recession territory.

5. Yield Curve (2s10s): -20.8% (7D) — Mildly confirmatory (worsening risk).
   Still positive, but narrowing suggests less growth optimism or greater rate-cut expectations creeping in.

90-Day Indicator Trends

Your “90-day history” block is more like a recent-snapshot window, but it still shows direction-of-travel across key series:

• Industrial Production (SAFE): 102.5 → 102.5 (flat) in the provided window. That steadiness argues against an imminent manufacturing cliff—but it also implies no acceleration cushion.

• Labor market cooling without stress:

  • Initial claims: roughly 211K (May 17) to 225K (June 5–6) in your history—an uptick, but still low.
  • Unemployment rate: 4.3% is flat in your window; today’s headline 4.1% (WATCH) suggests slight improvement versus those prints, consistent with the Sahm Rule staying safe.

• Household strain building under the surface:

  • Personal savings rate: 3.6% → 2.6% by late May/early June in your history (now 2.7% today). That’s a meaningful deterioration in household buffer stock.
  • Credit card delinquency: pinned near 2.9%, staying elevated rather than improving—consistent with “late-cycle normalization” turning into stress if layoffs rise.

• Liquidity regime shift risk:

  • ON RRP facility: bounces around but remains on a clear downtrend into near depletion in today’s reading ($250M, WARNING). In prior cycles, dwindling “excess cash” doesn’t automatically cause recessions, but it can amplify market volatility when shocks hit.

• Markets: strong price action + stretched macro valuations:

  • S&P 500: ~7409 → 7584 in the early-June history window, and 7786 today (SAFE) — risk assets remain buoyant.
  • S&P 500 P/E: stuck around 22x (WATCH); NASDAQ / GDP: 0.8231 (DANGER) and similar valuation-to-economy metrics remain extreme in your dashboard—this is less a recession signal and more a fragility signal if earnings expectations reset.

Net: the last ~90 days read as late-cycle slowing with soft-data deterioration and household buffer erosion, while markets remain strong—conditions that can persist, but tend to be vulnerable to a labor-market inflection.

Stock Screener Signals

Today’s quant flags cluster into two themes: (1) “value dividend” defensives and (2) selective “oversold growth.” The first bucket dominates: ARCC, AIG, BBY, FNF, HMC, T, LTM, BCE all screen as value/dividend. In macro terms, that suggests market participants are increasingly interested in cash-flow yield and valuation discipline—a common behavior when investors suspect growth may undershoot but don’t want to abandon equities.

The second bucket—CHTR (RSI 28) and TLK (RSI 30)—reads like targeted mean-reversion rather than broad risk-off. Importantly, this is not the profile you typically see at the front edge of recession (where screener lists skew heavily toward deep cyclicals collapsing and credit-sensitive balance sheets). Instead, it looks like a “late-cycle barbell”: dividend/value for stability plus a small sleeve of oversold growth bets.

One data quality note: the listed dividend yields (e.g., ARCC 1002%, AIG 257%) are almost certainly data/vendor artifacts (special dividends, annualization glitches, or stale price inputs). Treat the classification (value/dividend vs oversold growth) as the signal, not the literal yield numbers.

Latest Economic Developments

• Consumer sentiment deterioration (Aug preliminary): Coverage in the past 48 hours emphasizes that household confidence is weakening again in early August after two months of improvement—consistent with your DANGER sentiment reading. (axios.com)
  This matters for near-term recession risk mainly through discretionary spending and political risk premia: when sentiment is extremely low, the economy becomes more sensitive to small shocks (gas prices, layoffs headlines, credit tightening).

• GDP growth confirmation of “slow-but-positive”: The BEA advance estimate showed Q2 2026 real GDP +1.5% SAAR, down from +2.1% in Q1. (bea.gov)
  It’s not contraction, but it’s slow enough that any further drag (freight, housing, or hiring) can turn the narrative quickly.

• Next macro catalyst date: The BEA schedule shows August 26, 2026 for the second estimate of Q2 GDP and corporate profits—this is a high-signal waypoint for markets that are currently priced for a benign slowdown. (bea.gov)

Near-Term Outlook (Next 30 Days)

Base case for the next month: moderate risk, high sensitivity. The score is unlikely to jump into “high risk” unless labor data deteriorates meaningfully—but the system is primed for volatility because sentiment and goods indicators are already weak.

Key catalysts in the next 30 days:

• August 26, 2026: GDP (Second Estimate) + Corporate Profits (Q2 2026) — revisions that weaken final sales, profits, or demand composition could push the score higher. (bea.gov)
• Weekly initial claims (next 4–6 prints): You want to see whether claims stay anchored near ~209K–225K or trend upward persistently. A sustained climb would change the labor narrative quickly.
• Follow-through in confidence: If UMich stays near ~50 or falls further, the probability rises that “soft” pessimism becomes “hard” spending retrenchment (especially with a critically low savings rate).

What would lower the score:

• Stabilization in freight/goods indicators (a bottoming pattern).
• A modest rebound in savings rate (or evidence of slowing credit delinquencies).
• Any improvement in forward-looking business indicators without a concurrent tightening in credit spreads.

Long-Term Outlook (3-6 Months)

The 3–6 month picture is late-cycle fragility rather than imminent recession: labor triggers are still safe, financial conditions are loose, and spreads are tight—those are powerful recession suppressants. But the underlying trend set is not improving: household buffers are thin (savings rate DANGER), goods activity is weakening (freight DANGER), and sentiment is crisis-level—a combination that historically corresponds to nonlinear risk if job growth slows.

The key structural question is whether the economy is in a “soft-landing plateau” (growth slows to ~1–2% and holds) or a “rolling slowdown” (goods/housing weakness spreads into services employment). Your indicators currently argue for the former unless temp help keeps falling and quits soften further—because those are often early warnings that hiring appetite is breaking before unemployment spikes.

A second structural risk sits outside classical recession models: fiscal/interest expense pressure (high debt, high interest expense). That doesn’t typically trigger a near-term recession by itself, but it can reduce policy flexibility if growth disappoints.

What to Watch

Concrete thresholds and tripwires:

• Sahm Rule: Watch for a move toward 0.30+ (early warning) and especially 0.50 (trigger).
• Initial claims: A sustained move above roughly 250K (not one print, but a trend) would meaningfully raise near-term recession odds.
• Credit spreads (HY OAS): Your current 271 bps (SAFE) is complacent; a decisive break wider (e.g., >350–400 bps) would be confirmation that the growth scare is becoming credit stress.
• Freight Transportation Index: Look for stabilization; continued declines would keep signaling goods-side contraction risk.
• Personal savings rate: If it remains pinned near ~2.5–3.0%, consumers have limited shock absorption—watch discretionary categories and delinquency prints.
• August 26 (GDP/profits revisions): Any downgrade to growth composition or profits trajectory could reprice both markets and the risk score quickly. (bea.gov)

Sources

No data available for this window.