Recession Risk 37/100 — August 7, 2026

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

Today’s Recession Risk Score is 37/100 (MODERATE), up +3 points from 30 days ago (34 on July 8, 2026). The headline read is still not “recession imminent” because the labor market’s highest-frequency recession tripwires (claims, Sahm-rule-style unemployment dynamics) remain well-contained. But the score’s upward drift reflects a clearer late-cycle slowdown: growth is cooling, household buffers look thin, and several forward-looking cyclical indicators (temp help, freight, permits) are deteriorating. Net: insulation remains intact, vulnerability is rising—and the next payroll/unemployment prints matter more than equity levels.

Score Trend — Last 30 Days

The 30-day window (July 8 → August 7, 2026) began at 34 and ends at 37 (+3). The path was not a smooth climb—this has been a choppy, mean-reverting tape with “risk-on” liquidity/markets pushing the score down on some days while real-economy and household-stress inputs push it back up.

The range is wide for a moderate regime: min 34, max 44, average 36. The spike to 44 on August 1 looks like a short-lived risk flare rather than a trend break, because subsequent readings snapped back to the mid/high-30s. Still, the inability to sustainably retake the low-30s suggests downside asymmetry: it’s getting easier for risk to jump on bad labor/growth prints than it is for risk to fall meaningfully without a renewed growth impulse.

Key Drivers

1. Labor market still “safe,” but the margin for error is narrowing

   • Initial claims: 199k (week ending Aug 1, 2026) and continuing claims ~1.8M keep the near-term recession base case contained. (apnews.com)
   • Your Sahm Rule: 0.07 remains far from the 0.50 trigger level, reinforcing the “slowdown, not contraction” call.

2. Financial conditions remain loose (supportive of growth and risk assets)

   • Chicago Fed NFCI ~ -0.5 (loose/easy conditions) is inconsistent with an imminent credit-led downturn. (fred.stlouisfed.org)
   • Tight-ish credit spreads in your dashboard reinforce that the market is not pricing acute stress.

3. Yield curve regime improvement reduces the “immediate” recession signal

   • Your tracker shows 2s10s positive (0.44) and a normal 2s30s (0.98). This is not a guarantee—curve signals often work with long lags—but it does reduce the “now-now” recession drumbeat.

4. Growth deceleration is real and visible in hard data

   • Q2 2026 real GDP: +1.5% SAAR (advance estimate) is a clear slowdown regime, not a boom. (bea.gov)
   • Your GDPNow ~1.8% sits in the same neighborhood—sub-trend, but not collapse. (atlantafed.org)

5. Leading cyclical “early warning” series are flashing

   • Temporary help is DANGER in your system—historically a high-signal leading labor indicator (firms cut temps before core payrolls).
   • Freight is DANGER, consistent with a weakening goods cycle.

6. Household buffers look thin while sentiment is depressed

   • Your personal savings rate: 2.7% (DANGER) is a classic late-cycle fragility marker: it doesn’t cause recessions by itself, but it reduces shock-absorption capacity if hiring slows.
   • Michigan sentiment readings have been extremely weak in this period (June final 49.5). (data.sca.isr.umich.edu)

Category Breakdown

Using the provided CATEGORY BREAKDOWN counts:

• Primary Indicators: 3 safe / 5 watch / 1 danger — The core macro picture is “slowing but not breaking”; too many WATCH signals to call it benign, but not enough DANGER to call it high-risk.
• Secondary Indicators: 2 safe / 0 watch / 1 danger — Mixed secondary confirmation: some stabilization, but at least one persistent “tail-risk” input remains.
• Housing & Construction: 0 safe / 1 watch / 1 danger — Housing remains a key weakness channel (permits/starts soft), consistent with late-cycle cooling.
• Business Activity: 2 safe / 1 watch / 0 danger — Business activity is holding up better than households; this is one reason the score stays MODERATE.
• Consumer Credit Stress: 1 safe / 2 watch / 1 danger — Credit stress is creeping up at the margin; not systemic, but directionally negative for consumer-led growth.
• Market Signals: 6 safe / 3 watch / 5 danger — Markets are internally split: index levels/volatility look calm, but valuation/risk-ratio signals (e.g., equity-to-GDP, copper/gold) imply late-cycle fragility.
• Liquidity: 0 safe / 1 watch / 2 danger — Liquidity is an underappreciated risk amplifier; your ON RRP depletion and related signals argue for monitoring funding plumbing.
• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger — Real-time signals are not screaming recession, but they are no longer “all clear.”

Biggest Movers

From the BIGGEST MOVERS block (top 5 by |7-day % change|):

1. NY Fed Recession Probability (0.8%): +112.5% (7D)

   • Confirmatory (worsening risk) directionally (probability rising), even if the level remains low. Note: your text shows “0.8%” but also “~22%”—this is a definitional mismatch worth reconciling in the model inputs.

2. ON RRP Facility ($2B): -53.0% (7D) (despite +904% 1D bounce)

   • Confirmatory (worsening risk) for liquidity: very low RRP usage can imply less excess cash parked at the Fed and a system more sensitive to funding volatility.

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

   • Confirmatory (worsening risk): households are increasingly exposed to any labor-income wobble.

4. GDP Growth (QoQ SAAR) (1.5%): -20.0% (7D)

   • Confirmatory (worsening risk): reinforces the slowdown narrative. (This is the sort of move that can shift risk quickly if labor follows.)

5. Yield Curve (2s10s) (0.44): -13.2% (7D)

   • Contradictory / stabilizing relative to recession timing: despite the 7D drop, the curve remains positive, and the broader “re-steepened vs inversion” regime is generally less recessionary near-term.

90-Day Indicator Trends

Your 90-day history snapshot (most observations shown May 9 → May 30, plus today’s readings) highlights a consistent pattern: markets and financial conditions look resilient, while cyclical/household leading edges look brittle.

Markets: risk appetite stayed firm, valuations stretched

• S&P 500 rose from roughly 7,399–7,564 (May 10–May 30) to 7,710 today—a meaningful climb in ~90 days. This is consistent with the low VIX regime (mid-teens in late May; 15.8 today).
• Valuation/proportion signals remained elevated:
  • S&P 500 / GDP drifted up in late May (around 0.200 → 0.238 by May 30) and sits at 0.2378 today (still WARNING).
  • NASDAQ / GDP stayed DANGER (around 0.60 → 0.846 in late May) and remains extreme today (0.8118).

Interpretation: markets are pricing a soft-landing/AI/productivity narrative while macro leading edges imply a late-cycle slowdown. That divergence is not a recession call by itself, but it raises the odds that any labor shock produces a sharper risk repricing.

Financial conditions: consistently easy

• NFCI in May sat around -0.52 to -0.51 and remains loose today (-0.53). (fred.stlouisfed.org)
  Interpretation: easy conditions damp near-term recession odds; they also sometimes delay the recognition of cyclical weakness until labor cracks.

Labor: still stable, but temp help is a yellow-to-red leading edge

• Initial claims in May ranged roughly 200k–215k and are 199k today (better than late May). (apnews.com)
• Unemployment rate in the history panel showed 4.3% in May; today you report 4.2% (WATCH).
• Sahm rule in May reads 0.13; today 0.07—still safe, signaling no recessionary unemployment acceleration.

Interpretation: labor remains the primary reason the score is MODERATE, not HIGH. The key is whether temporary help deterioration bleeds into broader payroll softness over the next 1–3 prints.

Households: buffers have weakened quickly

• Personal savings rate moved from ~3.6% (May) to ~2.6% (late May) and stands at 2.7% today (DANGER)—a material deterioration in cushion.
• Credit card delinquency is sticky around ~2.9% in your panel (WATCH), consistent with creeping consumer stress.

Interpretation: the consumer can still spend if jobs hold—but low savings makes the economy more sensitive to even modest unemployment drift.

Growth/leading indicators: decelerating

• GDP growth slipped in your history panel from ~2.1% → ~1.6% by late May; today you cite 1.5% (Q2 advance estimate). (bea.gov)
• Conference Board LEI: the official June print fell -0.2% to 99.1, signaling cooling. (conference-board.org)

Interpretation: these are “slowdown” tells. For recession risk to jump, you typically need either (a) a sharper LEI slide for multiple months, or (b) labor deterioration that triggers Sahm-style dynamics.

Stock Screener Signals

Today’s flagged names cluster in two buckets: (1) value/dividend defensives and (2) oversold growth/telecom-like “balance-sheet duration” trades. That composition aligns with a market that’s still willing to own risk, but wants carry and cashflow while macro uncertainty rises.

• The heavy presence of value dividend screens (e.g., financial/insurance, telecom, yield vehicles) suggests investors are paying up for dependable cashflows and attempting to get compensated while growth decelerates.
• The oversold growth flags (e.g., very low RSI names like $CHTR) signal selective mean-reversion hunting rather than broad risk-off capitulation.

One caution: the displayed yields (e.g., 1002%, 654%) look like data-quality artifacts (likely annualization or special distributions). Interpreting them economically: the screener is telling you “market is rewarding cash return characteristics,” but you should normalize yield inputs before using them as a macro inference.

Latest Economic Developments

Labor market (last 48 hours):

• Initial jobless claims held at historically low levels: filings rose to 199,000 for the week ending Aug. 1, with the 4-week average ~198,750 and continuing claims around 1.8 million. (apnews.com)
• Ahead of today’s (Aug 7) payroll report release window, reporting highlighted expectations for ~100k-ish job growth and an unemployment rate near ~4.2%. (apnews.com)

Growth/backdrop:

• Q2 2026 GDP (advance) printed +1.5% SAAR, confirming deceleration versus prior quarters. (bea.gov)
• Conference Board LEI declined -0.2% in June to 99.1, partially reversing prior gains and reinforcing the “late-cycle cooling” message. (conference-board.org)

Manufacturing:

• ISM Manufacturing PMI for June: 53.3—still expansion, but easing from May and showing patchier subcomponents (notably weak/contracting employment subindex). (ismworld.org)

Financial conditions:

• Chicago Fed NFCI remains loose (around the -0.5 zone in late July). (fred.stlouisfed.org)

Near-Term Outlook (Next 30 Days)

The next month is about one thing: whether “slowdown” stays a slowdown—or becomes “labor-led downshift.”

Base case (most likely): the economy grinds through a late-cycle soft patch with:

• payroll growth modest but positive,
• unemployment roughly stable near the low-4s,
• credit spreads contained,
• and financial conditions still easy.

Catalysts that could push the score higher quickly:

• A downside payroll/unemployment surprise that lifts the 3-month unemployment rate enough to push the Sahm rule toward 0.5 (the fastest pathway from MODERATE → HIGH in this framework).
• Broadening LEI declines (multiple consecutive negative prints), especially if accompanied by a drop in temporary help and a rise in continuing claims.
• Liquidity/funding stress if RRP depletion coincides with tighter reserve conditions (watch overnight funding and bill-market behavior, even if credit spreads are calm).

Catalysts that could pull the score lower:

• A “re-acceleration” mix: steadier hiring + stabilization in permits/starts + freight bottoming + sentiment improvement (or at least no further collapse).

Long-Term Outlook (3-6 Months)

Three structural forces dominate the 3–6 month horizon:

1. Labor-market inertia vs. leading-edge deterioration

   • Claims and Sahm-style dynamics argue for continued resilience.
   • But temp help, freight, and housing permits are classic “early cracks.” If those persist, the probability of eventual payroll softness rises.

2. Easy financial conditions can delay the cycle—but not eliminate it

   • Loose conditions support asset prices and refinancing/issuance, which can sustain activity longer than the real economy “deserves.”
   • The risk is nonlinear: when labor finally turns, valuations and positioning can amplify the macro shock.

3. Household buffer erosion raises tail risk

   • A 2–3% savings rate is not a stable late-cycle cushion. It increases the odds that even a modest unemployment drift results in faster consumption cooling, rising delinquencies, and a more synchronized downturn.

Bottom line: the 90-day trajectory reads like late-cycle slowdown with rising fragility, not an active recession. If unemployment remains anchored, you can stay in a MODERATE band. If unemployment rises persistently over multiple prints, the score likely migrates into the 40s/50s quickly.

What to Watch

Labor (highest signal):

• Weekly initial claims: watch for a sustained move out of the ~200k zone toward the mid-200s. (apnews.com)
• Continuing claims: trend persistence matters more than one print.
• Unemployment rate / Sahm rule: any acceleration toward 0.5 is the regime switch.

Leading activity:

• Conference Board LEI: another month of decline (especially if steeper than -0.2%) would reinforce slowdown risk. (conference-board.org)
• Temporary help and freight: do they stabilize, or keep rolling over?

Housing:

• Permits and starts: continued deterioration would keep the cycle skewed negative.

Liquidity/credit:

• ON RRP / funding plumbing: further depletion plus volatility would be a quiet but meaningful risk accelerator.
• High-yield spreads: a breakout from tight levels would be an early “market confirmation” that growth risk is being repriced.

Sources

No data available for this window.