Recession Risk 34/100 — June 10, 2026

Recession Risk Score: 34/100 — MODERATE (-10 vs 30 days ago)

Today’s Recession Risk Score is 34/100 (MODERATE), down 10 points vs. 30 days ago (44 → 34). The downgrade is primarily about near-term recession odds easing as labor-market coincident stress remains contained and financial conditions stay broadly supportive. The score is not low because late-cycle fragilities have disappeared—rather, the high-signal “recession now” triggers (claims/unemployment dynamics, credit stress) still aren’t firing. Net: soft-landing/“growth scare” macro with tail-risk pockets, not an imminent NBER-style recession call for the next ~90 days.

Score Trend — Last 30 Days

Over the last 30 days (window 2026-05-11 → 2026-06-10), the score fell from 44 to 34 (-10). The range was tight-to-moderate: min 33 / max 44 / avg 37 across 31 samples—suggesting mean reversion lower rather than a clean, persistent downtrend.

The shape matters: the series showed spiky risk pops (notably 44 on June 1 and June 3) followed by fast retracement to the mid-30s (34 on June 4–5, then again June 8 and June 10). That pattern is consistent with a market and data environment where headline risk (inflation prints, energy, geopolitics, “bank losses” headlines, etc.) can reprice risk briefly—yet core recession plumbing (claims + spreads) keeps pulling the model back toward “moderate” rather than “elevated.”

Key Drivers

1. No real-time unemployment trigger (Sahm Rule still well below threshold)

   • Sahm Rule: 0.10 (SAFE) in your tracker, far from the typical trigger zone.
   • With initial claims at 225K (SAFE), the labor-market “crack” remains more leading/qualitative (temp help, quits) than hard/concurrent (claims, unemployment spike).
   • Translation: the most reliable near-term recession tripwire is quiet.

2. Yield curve has re-steepened, reducing near-term curve-implied recession pressure

   • 2s10s: +0.40 (WATCH, but positive) and 2s30s: +0.88 (SAFE).
   • This is not a guarantee of expansion, but it is a meaningful tail-risk reducer versus deep inversion regimes that often precede downturns.

3. Credit markets are not pricing systemic stress

   • HY OAS ~275 bps (SAFE)—still tight for an economy allegedly on the edge of recession.
   • Credit is often the “truth serum” for recession risk; today it reads as benign.

4. Leading indicators aren’t broadly confirming contraction

   • You cite Conference Board LEI +0.1% m/m (April) with positive 6-month change (+0.8%)—consistent with slowing but not a widespread downturn narrative.

5. Late-cycle labor and consumer cracks are accumulating (but not yet cascading)

   • Temporary help services: 2,490K (DANGER)—a classic early-warning labor series.
   • JOLTS quits rate: 1.9% (WARNING)—cooling worker confidence/bargaining power.
   • Consumer stress is visible via personal savings rate 2.6% (DANGER) and UMich sentiment 49.8 (DANGER)—a fragile buffer if labor cools further.

6. Inflation remains the wild card near-term (risk to “policy stays tight” scenario)

   • The next major catalyst is May CPI released today (June 10, 2026, 8:30am ET) per BLS schedule, which can swing rates, equities, and risk appetite quickly. (bls.gov)

Category Breakdown

• Primary Indicators: 3 safe / 4 watch / 2 danger
  Mixed but not recessionary: the danger cluster (notably temp help, savings) is meaningful, yet core recession triggers (claims/Sahm) remain contained.

• Secondary Indicators: 2 safe / 0 watch / 1 danger
  “Secondary” is mostly supportive; the single danger flag matters, but it’s not broad-based confirmation.

• Housing & Construction: 0 safe / 2 watch / 0 danger
  Housing is cooling/moderating rather than collapsing—consistent with slower growth instead of a housing-led recession impulse.

• Business Activity: 2 safe / 1 watch / 0 danger
  Business activity reads stable-to-expanding, consistent with the improvement tone in manufacturing surveys.

• Consumer Credit Stress: 0 safe / 3 watch / 1 danger
  This is a yellow-to-orange pocket: delinquencies and debt-service pressures are rising, which raises the risk of a consumption wobble if labor weakens.

• Market Signals: 6 safe / 3 watch / 5 danger
  A bifurcation: index levels and volatility look fine, but valuation/ratio-style metrics and “macro fear” ratios (e.g., copper/gold) are flashing late-cycle excess and growth skepticism.

• Liquidity: 0 safe / 1 watch / 2 danger
  Liquidity is not a crisis, but it’s not a cushion either—RRP depletion and related plumbing indicators reduce shock absorbers.

• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
  High-frequency reads “not breaking,” but with enough fragility that a few bad claims prints could change the story quickly.

Biggest Movers

1. NY Fed Recession Probability (5.4%): +143.9% (7D)
   Confirmatory (worsening) at the margin—but this is from a low base; the level still signals low recession odds in absolute terms.

2. Bank Unrealized Losses ($5155B): -90.3% (7D)
   Contradictory (improving)—a huge move, but likely data/measurement artifact rather than a true week-over-week fundamental swing. Treat as signal noise unless corroborated by bank funding spreads and deposit data.

3. Yield Curve (2s30s) (0.88): -80.8% (7D)
   Confirmatory (worsening) if the steepening is collapsing (less term premium / more front-end pressure). But your level is still positive; context matters more than % change.

4. ON RRP Facility ($577M): -57.9% (7D)
   Confirmatory (worsening liquidity cushion)—less cash parked at the Fed can mean less “easy liquidity” available in stress moments (though interpretation depends on broader reserves and bill supply).

5. VIX (18.9): -33.2% (7D)
   Contradictory (improving)—equity vol is relaxed; markets are not pricing acute stress today.

90-Day Indicator Trends

Your 90-day history window (as provided) shows a macro regime that is not deteriorating in the classic recession sequence (claims up sharply → spreads blow out → unemployment accelerates), but is showing late-cycle imbalance + consumer fragility.

Labor market: stable coincident, weakening leading edges

• Initial claims improved from 213K (Mar 12) → 202K (Apr 3) in the history snapshot, and today sits ~225K (still “SAFE” in your framework). The direction of travel is not recessionary yet, but the recent uptick matters as a watch item. (tradingeconomics.com)
• Sahm Rule in the history is 0.27 throughout mid-March/early April; today’s 0.10 implies the unemployment gap to its trailing low remains small—no trigger.
• JOLTS quits rate slid from 2.0% (Mar) to 1.9% (early Apr) (now WARNING). That’s consistent with cooling labor churn—often a precursor to slower wage pressure and slower consumption growth.

Consumer: the buffer is thinning

• Personal savings rate in the history moved 3.6% (Mar 12) → 4.5% (mid/late Mar–early Apr), but today is 2.6% (DANGER)—a sharp deterioration in the household shock absorber. That’s the single most important “why risk isn’t lower than 34” datapoint in your dashboard.
• Consumer sentiment in the history sat around 56.4–56.6 (warning); today is 49.8 (DANGER)—a clear downshift toward “crisis-level pessimism,” consistent with elevated job-loss fears and cost-of-living stress.

Activity and production: steady, with soft spots

• Industrial production index in the history is flat-to-up (102.3 → 102.6), and today is 102.5 (SAFE)—consistent with ongoing expansion.
• GDPNow 1.8% (WATCH) and QoQ GDP growth 1.6% (WATCH) fit a “below-trend growth” profile, not a contraction impulse.

Credit & financial conditions: supportive

• Chicago Fed NFCI drifted from -0.51 to around -0.43 in early April (still easy/near-normal). Today -0.49 (WATCH) is consistent with non-stressed financial conditions.
• HY spreads in your history were ~306–328 bps (Mar–early Apr); today ~275 bps implies meaningful tightening over the last ~60–90 days—very inconsistent with imminent recession.

Housing: cooling, not collapsing

• Housing starts rose from 1404K (Mar 12) to 1487K (mid/late Mar–early Apr); today’s 1465K (WATCH) is a mild pullback.
• Building permits dropped from 1448K (Mar 12) to ~1376–1386K in the history; today 1423K (WATCH) suggests housing is choppy but not in freefall.

Markets: complacency + valuation risk, with one big “real economy fear” flag

• VIX in the history was volatile (mid-20s to low-30s, then 18); today 18.9 says risk-on.
• Yet you have Copper-to-gold ratio at an extreme low (DANGER) and NASDAQ/GDP ratio (DANGER)—i.e., macro fear in cyclicals coexisting with equity exuberance in growth multiples. That divergence is classic late-cycle texture.

Stock Screener Signals

Your screener is overwhelmingly flagging “value dividend” names (ARCC, AIG, BBY, FNF, HMC, T, BCE, LTM) plus a couple of oversold growth setups (CHTR, TLK). That mix usually maps to a market that is still constructive on risk assets, but is rotating toward cash-flow and carry—a subtle “late-cycle preference” rather than a recession panic.

Two specific reads:

• Defensive carry + valuation compression theme: AIG, T, BCE, ARCC-style screens fit an investor posture that wants income and balance-sheet survivability if growth slows.
• Selective oversold growth mean reversion: CHTR (RSI 28) and TLK (RSI 30) imply there’s still appetite to buy beaten-down growth—but only where valuation/positioning has already reset.

One caveat: the reported “yields” in the screener (e.g., ARCC 1002%) are almost certainly data-quality artifacts (unit mismatch or special distribution handling). The signal (income/value bias) is still interpretable, but the absolute yield figures should not be taken literally without normalization.

Latest Economic Developments

1) NY Fed Survey of Consumer Expectations (released June 8, 2026): job-market anxiety rising, inflation expectations mixed-to-lower
The NY Fed’s May SCE indicates a deterioration in household financial outlook and shifting job perceptions—an important “soft data” counterweight to still-okay hard labor metrics. The release notes that short-term inflation expectations eased, while several labor/household expectations measures moved in a more cautionary direction (including higher expected quit behavior). (newyorkfed.org)
Macro interpretation: if job-loss fears firm while savings are already thin, consumption becomes more elastic to any labor-market cooling.

2) NFIB Small Business Optimism (May, released June 9, 2026): optimism soft; pricing intentions jump
NFIB reported the optimism index fell to 95.3 (below the long-run average), while the share of owners planning to raise prices rose sharply—Reuters highlighted a jump to 34%, the highest since mid-2022. (nfib.com)
Macro interpretation: small business sentiment is consistent with late-cycle grind (soft confidence), but the pricing-intentions component suggests inflation persistence risk—which can keep policy tighter than markets want, raising the odds of a growth scare.

3) International trade (April 2026, BEA release date June 9, 2026)
BEA’s current release calendar confirms April 2026 trade data published June 9. (bea.gov)
Macro interpretation: trade is rarely a near-term recession trigger by itself, but it can meaningfully swing quarterly GDP tracking (including models like GDPNow). In this environment, trade volatility is a plausible contributor to “GDP prints that look worse than underlying domestic demand.”

4) CPI day (May 2026 CPI released June 10, 2026)
BLS confirms May CPI is scheduled for June 10, 2026 at 8:30am ET. (bls.gov)
Macro interpretation: CPI is the main near-term catalyst that can flip the risk score through two channels—policy expectations (rates) and financial conditions (equity/credit). A hot print risks tightening conditions and reigniting “hard landing” pricing; a benign print supports the current moderate-risk baseline.

Near-Term Outlook (Next 30 Days)

Base case for the next month: moderate risk, choppy data, and high sensitivity to inflation + labor leading indicators. With the score down to 34, the model is effectively saying: “we need confirmation of labor deterioration or credit stress to reprice recession odds higher.”

Key catalysts in the next 30 days

• Weekly initial jobless claims (next release June 11, 2026)—a clean, fast way to detect whether temp-help weakness is translating into separations. (ycharts.com)
• June CPI / inflation follow-through: CPI today, then PPI and inflation expectations data (Michigan) can reinforce or fade the inflation narrative. (kiplinger.com)
• June FOMC meeting (mid-June): the policy reaction function matters more than the level of growth right now; “higher-for-longer” rhetoric can tighten financial conditions even without recession data.
• June/July payrolls: your own framework is explicit—if unemployment drifts up and claims trend higher, Sahm begins to move and the score can re-rate quickly.

What would move the score materially higher (into ~50+) in 30 days

• Initial claims trend higher for several weeks (not just one print), and
• HY OAS begins widening meaningfully from ~275 bps (credit starts to “believe” the slowdown), and/or
• Unemployment continues drifting up enough to pull Sahm off the floor.

Long-Term Outlook (3-6 Months)

The 3–6 month macro picture is best described as “late-cycle stability with asymmetric downside.” The economy can plausibly continue expanding—industrial production is fine, credit is calm, and the curve is no longer inverted in your key measure. But the distribution of outcomes is not symmetric because household buffers are weak (savings rate) and confidence is already depressed—meaning it won’t take much labor deterioration to produce a sharper spending slowdown.

Three structural themes to carry forward:

• Labor market is the fulcrum: temp help (DANGER) and quits (WARNING) are consistent with the early phase of labor cooling. If claims follow, recession odds rise quickly; if claims don’t, the economy can muddle through with below-trend growth.
• Inflation persistence risk is a policy risk: NFIB pricing intentions and energy-driven inflation concerns (in the market narrative) raise the probability that policy stays restrictive enough to cap growth—even if recession is avoided. (investing.com)
• Markets are sending mixed messages: low VIX and high index levels are “risk-on,” but copper/gold and valuation-to-GDP ratios scream late-cycle fragility. That combination historically aligns with periodic growth scares and sharp but temporary risk-off episodes rather than a smooth glidepath.

My probabilistic macro framing from these signals:

• Most likely: below-trend growth, volatile markets, recession risk stays moderate.
• Second most likely: growth scare (credit widens modestly, equities correct, but labor stabilizes).
• Tail risk: a faster labor deterioration (claims + unemployment) that forces the score sharply higher.

What to Watch

Labor / recession triggers

• Initial claims: watch for sustained moves above the “stable” band; a multi-week trend matters more than a single print. Next release June 11, 2026. (ycharts.com)
• Unemployment rate (4.3% WATCH): a continued drift higher is the direct pathway to Sahm rising.
• Temp help (DANGER): watch whether payroll diffusion weakens further (professional/business services often leads).

Credit / financial conditions

• HY OAS (~275 bps): widening + rising claims is the classic “risk score accelerant.”
• NFCI: any move toward meaningfully tighter conditions would validate the growth-scare tail.

Consumer stress

• Savings rate (2.6% DANGER): if this stays pinned low while delinquencies rise, consumption becomes fragile.
• Credit card delinquencies (2.9% WATCH): watch for acceleration, not levels.

Inflation / policy

• CPI (May, released June 10): the print and the market reaction (yields, dollar, equity breadth) matter as much as the number. (bls.gov)
• FOMC (mid-June): any guidance that delays easing can re-tighten conditions even without recession data.

Sources

No data available for this window.