Recession Risk 46/100 — February 28, 2026

Recession Risk Score: 46/100 — ELEVATED

Today’s 46/100 (ELEVATED) score implies the U.S. economy is not in an imminent recession over the next ~90 days, but the risk distribution is left-skewed: coincident “hard” data (especially layoffs/claims and broader financial conditions) still looks stable, while forward-looking and cyclical signals (expectations, temp help, freight, LEI-style composites) are increasingly consistent with a late-cycle slowdown that can tip if labor-market cooling accelerates.

Key Drivers

1) Labor market: low-fire holds, but watch for an inflection

Initial jobless claims: 212k (week ending Feb 21, 2026), still consistent with low-layoff conditions. (apnews.com)
The key near-term recession “tell” is whether claims break out from the ~200–230k range into a persistent uptrend (and whether continuing claims rises alongside it). Continuing claims were reported down to ~1.83M in the prior week—supportive for now. (apnews.com)

Risk implication: Labor is not confirming recession in the near term. But if claims re-accelerate while quits soften further, the risk score can move higher quickly.

2) Sahm Rule: elevated, not triggered

Sahm Rule: 0.30 vs. the classic 0.50 trigger: this matches a slowdown regime, not a clean recession call.
Risk implication: This is a “watch” signal—consistent with rising probability, but it needs another leg up to become decisive.

3) Yield curve: normalized (supportive), but steepening can be a late-cycle feature

Your 2s10s ~ +0.59 is meaningfully positive—historically reducing near-term recession odds vs. inversion regimes.
But the steepening you flag (e.g., 2s30s ~ 1.26) can also appear when markets price slower growth and future easing.

Risk implication: Curve shape is not flashing “imminent recession”, but it’s no longer the bearish “inversion warning” story—it’s now more about why it’s steepening.

4) Expectations & confidence: still in recession-warning territory

The Conference Board’s Expectations Index rose to 72 in February, but remains below 80 (a widely-cited recession-warning threshold) for an extended stretch. (apnews.com)

Risk implication: Expectations are consistent with fragile growth and susceptibility to shocks (energy/inflation surprises, credit events, layoffs).

5) Inflation pulse: January PPI ran hot → policy flexibility is constrained

January 2026 PPI: +0.5% m/m, +2.9% y/y (hotter than consensus), with services pressures notable. (barrons.com)
This matters because sticky upstream inflation can keep the Fed cautious, limiting the speed/size of support if growth softens.

Risk implication: A “growth wobble” with “sticky inflation” raises the probability of policy being late (or less supportive), increasing downside tail risk.

6) Financial conditions: still loose—important cushion

Chicago Fed NFCI: around -0.56 (loose/easy conditions), not what you typically see heading into a recession. (chicagofed.org)

Risk implication: Easy financial conditions are a meaningful offset to weak leading indicators—until/unless credit spreads widen and lending standards tighten sharply.

90-Day Indicator Trends

Below is the “direction of travel” using your provided 90-day history, emphasizing 30/60/90-day comparisons and inflections.

Credit spreads (HY OAS proxy): still contained, but drifting wider vs. January tights

Now: ~298 bps (Feb 28)
~30 days ago (late Jan): lows around 264–272 bps (Jan 22–29 range)
~60–90 days ago (early Dec): mostly 288–294 bps
Trend: spreads tightened into late January, then re-widened into late February, but remain far from stress.
Interpretation: markets are pricing more macro uncertainty, not a credit event.

Yield curve (2s10s): still positive, modestly down from early January

Now: +0.59 (Feb 28)
~30 days ago (late Jan): ~+0.70 to +0.74
~60–90 days ago (early Dec): ~+0.55 to +0.60
Trend: positive throughout; peaked in late Jan, then cooled back toward early-Dec levels.
Interpretation: curve is not warning of imminent recession, but it’s consistent with slower growth expectations vs. late January.

Initial claims: stable range, no breakout

Now: 212k (Feb 21 week)
30–60–90 days: generally ~200k–237k
Trend: choppy but contained.
Interpretation: recession risk doesn’t jump until this becomes a trend, not noise.

Sahm Rule: improving slightly

Now: 0.30
~90 days ago: 0.35 (Dec 1)
Trend: down modestly (improvement), but still elevated.
Interpretation: consistent with “slowing, not contracting”—but unemployment must not accelerate.

NFCI: steady easy conditions

Now: -0.56
~60–90 days ago: roughly -0.52 to -0.56
Trend: essentially flat and easy.
Interpretation: financial conditions are not confirming recession—yet.

Consumer sentiment (UMich): rebounded from Dec but remains weak

Now: 56.4
~90 days ago: 52.9
Trend: improved, but still depressed.
Interpretation: weak sentiment increases vulnerability of discretionary demand if labor softens.

Latest Economic Developments (past ~48 hours)

Jobless claims: still “low-fire”

Filings rose modestly to 212k for the Feb 21 week; continuing claims reported around 1.83M. The labor market is still characterized as “low-hire, low-fire.” (apnews.com)

Consumer confidence: better, but expectations remain recessionary

Conference Board consumer confidence improved to 91.2, and expectations rose to 72, still below 80 (recession-warning zone). (apnews.com)

Wholesale inflation (PPI): upside surprise keeps “Fed put” less reliable

The BLS reported January PPI +0.5% m/m and +2.9% y/y, hotter than expected; next PPI timing has been affected by prior shutdown delays (with schedule adjustments communicated by BLS). (barrons.com)

Fed messaging: inflation credibility is still a central theme

Atlanta Fed President Raphael Bostic emphasized inflation still running above target and warned about credibility risks if inflation settles at higher levels—while also noting he does not expect a recession. (barrons.com)

Near-Term Outlook (Next 30 Days)

Base case: slow growth / late-cycle churn. The risk score stays in the mid-40s to low-50s unless labor deteriorates or credit reprices.

Catalysts that can move the score quickly:

February jobs report (early March): A downside surprise in payrolls plus a tick higher in unemployment would push the Sahm metric closer to trigger territory.
Weekly claims (next 2–3 prints): Watch for a shift from “stable” to persistent rising trend (e.g., repeated prints >230k with an upward 4-week average).
PCE inflation for January (March): If PCE comes in firm after hot PPI, markets may price fewer/further cuts, tightening financial conditions.
Credit spreads: A move from ~300 bps toward 350–400 bps would be a meaningful regime change.

Long-Term Outlook (3–6 Months)

The 90-day trajectory shows a classic late-cycle tension:

Hard data & financial conditions (claims, NFCI, spreads) are not recessionary—that’s why the score is ELEVATED, not HIGH.
Leading/cyclical labor (temp help) and goods proxies (freight) being in “danger” is how you get surprise weakness later—often with a lag.
Inflation stickiness risk (hot PPI, credibility-focused Fed messaging) raises the odds of a scenario where growth cools but policy easing is slower than markets want, which historically increases recession sensitivity to shocks.

What the 90-day setup suggests: if layoffs remain contained, the economy can grind through with sub-trend growth. But if labor-market cooling becomes self-reinforcing (quits fall → hiring slows → unemployment rises → claims trend up), the probability of a Q2/Q3 downturn rises meaningfully.

What to Watch

Labor (most important):

Initial claims: sustained move >230k with a rising 4-week average.
Continuing claims: acceleration back upward (labor market “duration” stress).

Inflation / Fed reaction function:

Confirmation that hot upstream inflation is feeding into PCE components (March data).
Fed speakers signaling less willingness to cut despite slowing growth. (barrons.com)

Financial conditions / credit:

HY spreads: a regime shift if >350 bps and trending.
NFCI: move toward zero would indicate tightening. (chicagofed.org)

Confidence/leading indicators:

Expectations index: sustained time below 80 continues to argue for elevated risk. (apnews.com)

Bottom line: A 46/100 score fits the current mix: labor and financial conditions are cushioning, while leading indicators and cyclicals are warning. If the next month delivers rising claims + wider spreads alongside sticky inflation, this quickly becomes a 55–65 risk environment.