Recession Risk 34/100 — July 8, 2026

Recession Risk Score: 34/100 — MODERATE (+0 vs 30 days ago)

Today’s Recession Risk Score is 34/100 (MODERATE), unchanged vs. 30 days ago (34 on June 8 → 34 on July 8). The signal stack still reads as “slowdown risk, not contraction risk”: the highest-frequency labor triggers remain quiet (Sahm Rule well below threshold; claims still low), while financial conditions and credit pricing remain loose (tight HY spreads, easy NFCI). The caution flag is increasingly about momentum—soft hiring, pockets of leading-indicator weakness (temp help / freight), and a notable step-down in GDPNow rather than a broad-based hard-data rollover.

Score Trend — Last 30 Days

Over the last 30 days (June 8 → July 8), the score started at 34 and ended at 34, with a min of 33, max of 44, and an average of 37 (31 samples). The path matters more than the net change: the score has oscillated rather than trended, consistent with an economy that’s digesting a slowdown but hasn’t tipped into a self-reinforcing deterioration loop.

The shape looks mean-reverting with intermittent spikes—brief bursts of risk (into the low-to-mid 40s) that quickly fade back toward the mid-30s. That pattern typically shows up when markets and liquidity stay supportive even as growth and labor breadth soften at the margins. In other words: the “floor” remains intact, but the economy is gradually losing altitude.

The last 10 readings highlight this choppiness (37, 38, 34, 34, 38, 33, 37, 34, 38, 34). This is stabilization at a moderate level, not an accelerating downturn—yet.

Key Drivers

1. Real-time recession trigger stays dormant (Sahm Rule: 0.07).
   Your tracker’s Sahm Rule at 0.07 is “nowhere near firing,” keeping the most reliable real-time recession check firmly in the safe zone. This is the single biggest reason the score is not moving higher.

2. Credit markets are not pricing stress (HY OAS: 272 bps).
   High-yield option-adjusted spreads around ~2.72% remain tight—consistent with risk-on pricing rather than recession hedging. A St. Louis Fed/FRED dashboard shows the ICE BofA HY OAS at ~2.720% (July 6, 2026), i.e., still very compressed. (fredaccount.stlouisfed.org)

3. Financial conditions remain loose (Chicago Fed NFCI: -0.50).
   Your reading of -0.50 aligns with “easy money” conditions at the system level. This is supportive for growth and tends to delay (or mute) recession dynamics unless labor cracks. RecessionPulse’s NFCI page also shows -0.50 with conditions still described as loose. (recessionpulse.com)

4. Growth momentum is decelerating (GDPNow step-down).
   The Atlanta Fed’s GDPNow estimate for Q2 2026 fell to 1.2% on July 1 from 2.5% on June 25—a meaningful “momentum shock” even if still positive growth. That drop is a key contributor to the score staying in MODERATE rather than drifting down. (atlantafed.org)

5. Labor market is cooling (June payrolls +57k; UR down on participation).
   June’s jobs report showed payroll growth of +57,000 and an unemployment rate down to 4.2%, but the decline in unemployment was helped by lower participation—a yellow-flag combination (soft hiring + “opt-out” dynamics). Axios captured the key mechanical point: fewer working and fewer looking can push the rate down without strength. (axios.com)

6. Manufacturing is expansionary (ISM Manufacturing PMI: 53.3).
   ISM manufacturing at 53.3 in June implies continued output growth and, per ISM’s own historical mapping, is consistent with roughly ~2% real GDP growth. That’s not recessionary. (ismworld.org)

Category Breakdown

• Primary Indicators: 3 safe / 4 watch / 2 danger
  Mixed but not broken. The key is that the highest-signal labor triggers are not confirming recession, even while some leading components (temp help) flash red.

• Secondary Indicators: 2 safe / 0 watch / 1 danger
  Secondary reads are still largely supportive; the danger print here is best treated as a “watch for confirmation” bucket rather than a standalone recession call.

• Housing & Construction: 0 safe / 1 watch / 1 danger
  Housing is a mild drag: permits/starts are not collapsing, but below-trend activity keeps the category from contributing “green shoots” to the score.

• Business Activity: 2 safe / 1 watch / 0 danger
  This is a stabilizer. With manufacturing still expanding, business activity is not validating recession risk.

• Consumer Credit Stress: 0 safe / 3 watch / 1 danger
  The consumer is increasingly the fault line: delinquencies + low savings raise fragility, even if the labor market hasn’t forced a broad pullback yet.

• Market Signals: 7 safe / 2 watch / 5 danger
  Markets are sending a split message: index levels/volatility/spreads look calm, but valuation and “fear ratios” (e.g., copper/gold; tech valuation vs GDP) inject tail-risk into the score.

• Liquidity: 0 safe / 1 watch / 2 danger
  Liquidity is more nuanced: ON RRP depletion signals the post-QT plumbing has shifted. This isn’t automatically recessionary, but it increases sensitivity to shocks if reserves tighten abruptly.

• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
  High-frequency is the watch zone: claims are fine (your 215k), but freight/temps remain recession-class leading weak spots.

Biggest Movers

Using the top 5 by absolute 7-day % change:

1. Freight Transportation Index (0.3): +350.0% (7D)
   This looks like a base-effect jump off a depressed level, not a clean “all-clear.” Given freight is still flagged DANGER in your dashboard, the move is contradictory (improving) but not yet confirmatory.

2. SLOOS Lending Standards (8.1%): +88.7% (7D)
   Higher net tightening is confirmatory (worsening risk): bank credit availability usually matters with a lag, and a step-up here is consistent with a late-cycle slowdown story.

3. Yield Curve (2s30s) (0.86): -82.0% (7D)
   A sharp flattening on the long-end spread is confirmatory (worsening risk) if it reflects “growth doubts” rather than “inflation relief.” Given your other indicators (GDPNow downshift), it leans growth-caution.

4. NY Fed Recession Probability (6.3%): -70.5% (7D)
   This is contradictory (improving). The model-based probability falling reinforces “not imminent recession,” though models can lag when labor inflects quickly.

5. US Interest Expense ($1219B): +28.3% (7D)
   This is confirmatory (worsening structural risk) (fiscal constraint / crowding-out / policy inflexibility), though it is more 3–12 month risk than 90-day recession timing.

90-Day Indicator Trends

Your 90-day history window (as provided) is dominated by three macro themes: (1) easing financial conditions, (2) slowing but positive growth, and (3) rising fragility in consumer/leading indicators.

Growth / nowcasts

• GDP Growth (QoQ ann.) in your history flips between 0.5–0.7% (warning) early in the window and ~2.1% (watch) later (April 9–May 3 samples). Net: growth improved from “low” to “okay,” but the regime remains “slower than trend.”
• GDPNow is remarkably stable in the provided history at 1.8% across April–May, but your narrative and the Atlanta Fed page confirm a later step-down to 1.2% on July 1 (from 2.5% on June 25). (atlantafed.org)
  Interpretation: the deceleration is recent and abrupt, which is why it’s showing up as a score driver now even though the 90-day block looks flat.

Labor (real-time)

• Initial claims in your history moved from ~202k (Apr 9–11) to 219k (mid-Apr), then dipped to 189k (May 1–2). This is consistent with your current ~215k: still low and range-bound.
• The key labor deterioration is composition/breadth: Temporary Help Services remains in DANGER and flat around ~2.475M in the history block—suggesting a persistent leading weakness (firms cutting “flex labor” first).
• Unemployment rate in the provided history is 4.3% (April–May observations). Your current read is 4.2%—directionally fine, but the June jobs report details imply the dip is not purely strength-driven. (axios.com)

Financial conditions & markets

• NFCI drifted more negative (easier) from roughly -0.43 to -0.52 in the history block (April → May), aligning with today’s -0.50: conditions have remained loose for months.
• VIX fell meaningfully: from ~25.8 (Apr 9–10) down to ~16.9 by early May in your history—risk appetite increased, consistent with today’s calm-vol regime.
• Credit spreads tightened from ~312 bps to the high-280s/low-290s in the history, consistent with today’s ~272 bps (even tighter). (fredaccount.stlouisfed.org)
  Interpretation: markets are not paying for recession risk—if the economy weakens further, spreads widening would likely be the clearest “confirmation event.”

Consumer / balance sheet

• Personal savings rate fell from 4.5% to 3.6% in the history—matching today’s low-cushion warning framing.
• Debt service ratio is broadly flat around 11.3% in the history, near today’s 11.2%: not yet a break, but elevated enough that labor softening would translate faster into delinquencies.
• Credit card delinquency is flat around 2.94% in the history and remains ~2.9% now—watch for a trend up, because this tends to accelerate late-cycle.

Bottom line from the 90-day view: the “market/liquidity umbrella” has stayed open, but the real economy is slowly getting wetter (temp help, freight, hiring softness). The score is stable because the deterioration is not yet broad or self-reinforcing.

Stock Screener Signals

Today’s quant flags are dominated by “value dividend” names (ARCC, AIG, BBY, FNF, HMC, T, BCE) with a smaller pocket of oversold growth (CHTR, TLK). That mix usually implies two simultaneous market behaviors:

1. Preference for cash-flow + valuation support.
   Multiple names screen at low P/E (AIG ~8.8; BBY ~8.4; FNF ~7.9; HMC ~5.0; T ~10.0). In a macro context, that often maps to “soft-landing but don’t pay up”—investors want earnings durability and price discipline more than pure expansion beta.

2. Selective mean reversion in punished growth.
   CHTR (RSI ~28) and TLK (RSI ~30) look like “oversold growth” recovery candidates rather than broad tech momentum trades. That fits your macro read: no imminent recession, but growth is decelerating, so the market’s risk appetite becomes selective.

One operational note: several displayed “yields” (e.g., ARCC 1002%, AIG 257%) are clearly data artifacts/outliers rather than investable dividend signals. Treat the factor labels (value/dividend; oversold growth) and the P/E/RSI as the real content, not the raw yield field.

Latest Economic Developments

1) Growth nowcast downshift is the headline macro development.
The Atlanta Fed’s GDPNow estimate for Q2 2026 fell to 1.2% on July 1 from 2.5% on June 25. (atlantafed.org)
This matters because it’s the cleanest “hard-ish” model synthesis of incoming data: even if GDP doesn’t contract, the economy is operating with less buffer against shocks.

2) June jobs report: soft hiring, “misleadingly better” unemployment rate.
Recent coverage emphasized that payrolls rose just +57k in June (well below expectations) while unemployment ticked down to 4.2% largely because participation fell—fewer people counted as looking for work. (axios.com)
This is not recession proof, but it is a credible momentum warning, especially if July payrolls repeats the weakness.

3) Manufacturing remains a stabilizer (for now).
ISM’s June Manufacturing PMI printed 53.3, still expansionary. ISM’s commentary explicitly links that reading to about ~2% annualized real GDP historically—i.e., inconsistent with near-term recession odds. (ismworld.org)

4) Inflation calendar becomes the next macro catalyst.
The June 2026 CPI release is scheduled for Tuesday, July 14, 2026 (8:30 a.m. ET) per the BLS schedule. (bls.gov)
Given the Fed is on hold (policy rate range consistent with your ~3.6% effective), CPI is the next major “macro hinge” for rates expectations and risk appetite.

Near-Term Outlook (Next 30 Days)

The next 30 days are about confirmation—does the current slowdown remain contained, or does it spread into claims, credit, and sentiment-driven spending cuts?

Base case (most likely): score stays in MODERATE (low-to-mid 30s).

• Claims remain roughly 200k–230k, Sahm stays well below trigger, HY spreads remain tight.
• Markets remain supported, but leadership tilts toward quality/value cash-flow rather than high multiple expansion.

What could push the score higher quickly (into 40+):

• A second consecutive weak payroll report plus an uptick in initial and continuing claims (the fastest hard indicator to turn).
• HY OAS widening meaningfully (e.g., a jump from ~270 bps toward 350–400 bps would be a classic confirmation that markets are repricing default risk).
• A continued “stair-step down” in GDPNow updates (especially if it drifts toward ~0%).

Key scheduled catalyst

• CPI (June data): July 14, 2026. (bls.gov)
  A downside inflation surprise could keep conditions loose (supporting risk assets), while an upside surprise could re-tighten financial conditions and raise recession odds with a lag.

Long-Term Outlook (3-6 Months)

Over a 3–6 month horizon, the macro picture is best described as late-cycle deceleration with high valuation and fiscal fragility, buffered by still-easy financial conditions.

• Constructive forces: Loose NFCI, tight HY spreads, and still-expanding manufacturing reduce the probability of an abrupt recession start. (recessionpulse.com)
• Deteriorating forces: Leading labor components (temp help), consumer fragility (low savings; rising delinquencies), and growth downshifts raise the probability of a “slow bleed” that can become recessionary if labor turns nonlinearly.

Historically, recessions tend to become unavoidable when labor market deterioration becomes persistent—not when growth slows from 2–3% to ~1%. Your tracker is consistent with that: the economy can run at “stall speed” for a while if credit and conditions remain supportive. The 90-day trajectory suggests the economy is losing momentum, but it has not yet entered the feedback loop (layoffs → claims → income → delinquencies → credit tightening → more layoffs) that drives the score into high-risk territory.

What to Watch

Labor (fastest recession escalator)

• Initial claims: watch for a sustained move above ~240k and rising 4-week average.
• Continuing claims / insured unemployment: acceleration matters more than any single print.
• Sahm Rule: any move from 0.07 toward 0.3–0.5 would be a serious regime change.

Credit & financial conditions (best confirmation signal)

• HY OAS: a break from ~2.7% into the mid-3s would be an early warning; 4%+ would be a broader stress signal. (fredaccount.stlouisfed.org)
• NFCI: watch for a rapid move toward 0 (tightening) from -0.50. (recessionpulse.com)

Growth pulse

• GDPNow updates: does it stabilize around ~1–2%, or continue stair-stepping lower after the 2.5% → 1.2% drop? (atlantafed.org)

Inflation / rates

• CPI (June data): July 14, 2026—the next major macro volatility event. (bls.gov)

Sources

• atlantafed.org
• axios.com
• axios.com
• apnews.com
• ismworld.org
• recessionpulse.com
• stlouisfed.org
• bls.gov
• macroornoise.com