Recession Risk 34/100 — June 11, 2026

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

Today’s Recession Risk Score is 34/100 (MODERATE), and it has fallen by 10 points over the past 30 days (from 44 to 34). The downgrade in risk isn’t because the economy is “booming”—it’s because the hard labor data and credit spreads are still inconsistent with an imminent contraction, even as several forward-looking consumer and goods-cycle gauges remain ugly. In short: the base case is still slow growth, but the tail risk is consumer-led—especially with sentiment depressed and the savings buffer thin.

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Score Trend — Last 30 Days

The score moved from 44 → 34 over the last 30 days (Δ -10), with a range of 33–44 and an average of 37. The defining feature of this window is step-down mean reversion: risk held elevated into early June, then quickly repriced lower and stabilized.

The last 10 readings show the pattern clearly: a brief spike to 44 on 2026-06-03, followed immediately by a drop to 34 on 2026-06-04, and then multiple closes clustered around 34–38, ending flat at 34 on 2026-06-11. That shape (spike → reset → tight range) typically implies the market/economy absorbed a scare (or a data-risk) without follow-through in labor stress or credit—while leaving the system vulnerable if the next consumer/labor prints confirm the weaker leading indicators.

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Key Drivers

1. Labor market still expanding; recession triggers not close

   • May payrolls +172k; unemployment 4.3% (BLS release dated June 5, 2026, per your input).
   • Sahm Rule: 0.10 (SAFE)—well below the 0.50 trigger, signaling no rapid, broad labor deterioration yet.

2. Weekly claims remain benign (watch the trend, not the week)

   • Initial claims: 225k (SAFE); 4-week avg ~214,750 (as of the May 30 week per your input).
   • This is consistent with “late-cycle cooling,” not recessionary layoffs—unless the 4-week average breaks higher persistently.

3. Credit stress is not pricing recession

   • HY OAS ~278 bps (SAFE) today; your snapshot also cited ~2.74% on June 4.
   • Chicago Fed NFCI: -0.51 (SAFE)—overall conditions still loose, inconsistent with systemic stress.

4. Consumer-side fragility is the main near-term risk

   • UMich sentiment: 49.8 (DANGER) with May at 44.8 and June prelim due June 12 (per your input).
   • Personal savings rate: 2.6% (DANGER)—low buffer raises sensitivity to any labor/inflation shock.

5. Goods economy is flashing yellow-to-red despite “headline” resilience

   • Temporary help: 2,490k (DANGER)—a classic early-layoff indicator.
   • Freight Transportation Index: 0.5 (DANGER)—weakness in goods movement often precedes broader slowing.

6. Inflation/energy risk re-entered the narrative this week

   • BLS CPI release dated June 10, 2026 notes energy rose 3.9% in May (following 3.8% in April). (bls.gov)
   • Even if core moderates, an energy-driven impulse can hit sentiment and discretionary spend quickly.

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Category Breakdown

• Primary Indicators: 3 safe / 4 watch / 2 danger
  Mixed: the “recession trigger” tools (Sahm/SOS) are calm, but forward labor (temp help) and consumer conditions keep this category from clearing.

• Secondary Indicators: 2 safe / 0 watch / 1 danger
  Generally constructive, but the outlier danger signal suggests “under the hood” fragility hasn’t vanished.

• Housing & Construction: 0 safe / 2 watch / 0 danger
  Housing is not collapsing, but it’s not accelerating—permits/starts are in “slowdown mode,” limiting growth impulse.

• Business Activity: 2 safe / 1 watch / 0 danger
  Business activity looks stable overall; the key is whether hiring components (and small business confidence) follow demand lower.

• Consumer Credit Stress: 0 safe / 3 watch / 1 danger
  This is one of the most important watchpoints: delinquencies and debt service are elevated, and low savings reduces shock absorption.

• Market Signals: 7 safe / 2 watch / 5 danger
  Markets are strong at the index level, but valuation and risk-ratio “excess” measures are screaming—classic late-cycle behavior.

• Liquidity: 0 safe / 1 watch / 2 danger
  Liquidity is a sleeper risk: depletion dynamics (e.g., ON RRP near empty) can amplify volatility if risk appetite turns.

• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
  High-frequency is giving mixed signals; the danger component argues we shouldn’t over-trust slow-moving aggregates.

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Biggest Movers

1. Yield Curve (2s30s) 0.88: +445% (7D) — contradictory / improving
   A sharp steepening typically reduces recession signal (less inversion stress), but watch whether steepening is driven by growth optimism or term premium/inflation risk.

2. NY Fed Recession Probability 5.1%: +217.5% (7D) — confirmatory / worsening (but from low base)
   The level is still low, but the jump suggests term-structure-based recession odds have become more sensitive recently.

3. Bank Unrealized Losses $5,155B: -90.3% (7D) — contradictory / improving (data quality flag)
   A move this large is more likely measurement/vintage noise than reality. Treat as a reporting artifact until confirmed.

4. VIX 19.9: -28.9% (7D) — contradictory / improving
   Falling volatility supports risk assets and loosens financial conditions—helpful for the near-term growth outlook.

5. Sahm Rule 0.10: -25.9% (7D) — contradictory / improving
   Lower Sahm readings reinforce that the labor market hasn’t broken—still a key anchor against “imminent recession” calls.

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90-Day Indicator Trends

The 90-day history you provided is sparse in calendar coverage (many series show observations concentrated from mid-March through early April), but it still reveals direction of travel and which signals are structurally “stuck.”

Labor: stable headline, weakening leading edges

• Unemployment rate: 4.4% (Mar–early Apr) → 4.3% (Apr 5) → 4.3% today (WATCH).
  The rate is not surging, consistent with a non-recession baseline, but it remains in a “late-cycle drift” regime.
• Sahm Rule: 0.27 (Mar) → 0.20 (Apr 5) → 0.10 today.
  This is a meaningful improvement in the fastest recession trigger, aligning with the lower risk score.
• Temp help: 2,447k (Mar) → 2,475k (Apr 4) → 2,490k today (DANGER).
  Despite small numeric changes in the sample, today’s classification indicates the broader trend is still down vs prior cycle norms, and this remains one of the most recession-relevant “early warning” labor series.

Consumer: sentiment weak; buffers thinner

• UMich sentiment: 56.4 (Mar) → 56.6 (early Apr) → 49.8 today (DANGER).
  That’s a clear downshift into “crisis-level pessimism,” raising the risk of demand air pockets.
• Personal savings rate: 3.6% (Mar 13) → 4.5% (Mar–early Apr) → 2.6% today (DANGER).
  The implication is straightforward: the consumer has less self-insurance if gasoline/food costs re-accelerate.

Credit and liquidity: not flashing systemic, but consumer stress rising

• HY OAS: ~309–328 bps (Mar–early Apr history) → 278 bps today.
  Tightening spreads are growth-supportive and argue against imminent default waves.
• ON RRP: history shows episodic jumps (including $80B prints in late March/early April), while today reads $387M (WARNING)—effectively depleted.
  Mechanically, this reduces an important liquidity “buffer” that previously absorbed reserves shifts.

Markets: strong indexes; valuation risk elevated

• S&P 500: ~6,673 (Mar 13) → ~6,583 (Apr 4) → 7,267 today (SAFE).
  Risk assets are levitating even as consumer/goods signals weaken—classic divergence risk.
• Nasdaq: ~22,312 (Mar 13) → ~21,879 (Apr 4) → 25,170 today (SAFE).
  This reinforces the idea that recession risk is not being priced by equities, while some valuation ratios are flagged as danger.

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Stock Screener Signals

Today’s quant flags are dominated by “value dividend” names with low P/E multiples (AIG ~8.8, BBY ~8.4, FNF ~7.9, HMC ~5.0, T ~10.0) alongside a couple oversold growth setups (CHTR RSI ~28; TLK RSI ~30). The factor mix is telling: the screen is finding opportunity in cash-flow and defensives, not in broad cyclicals—consistent with a market that’s still “risk-on” at the index level but selective under the surface.

Two implications stand out:

1. Defensive carry is back in favor.
   When dividend/value names appear heavily, it usually signals that investors want income + balance sheet durability. That matches the macro: low systemic credit stress, but rising worry that consumption slows and earnings growth becomes more scarce.

2. Mean-reversion pockets are forming in idiosyncratic growth.
   CHTR’s oversold reading suggests some growth equities are being punished (possibly for leverage/competitive pressures), creating tactical setups. In a true recession setup, you’d expect the screen to tilt even more toward staples/utilities/healthcare and away from any levered growth.

One data quality note: the listed dividend yields (e.g., ARCC 1002%) are almost certainly feed/format anomalies (annualization or special distributions). Treat yield magnitude cautiously; treat the factor label + valuation + RSI as the more reliable signal.

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Latest Economic Developments

Inflation: The Bureau of Labor Statistics released the May 2026 CPI report on Wednesday, June 10, 2026. In the BLS release, energy prices rose 3.9% in May after 3.8% in April, underscoring that energy is again a key inflation impulse. (bls.gov) This matters for recession risk less through “Fed panic” and more through sentiment and real purchasing power—exactly where your dashboard is already weak.

Fed setup: The Federal Reserve’s official calendar shows the next FOMC meeting is June 16–17, 2026. (federalreserve.gov) Ahead of that meeting, the macro mix is awkward: growth is slowing in pockets, but energy-driven inflation pressure complicates an easy dovish pivot.

Treasury / policy narrative: Treasury Secretary Scott Bessent delivered remarks framed around economic security and industrial capacity (Reagan National Economic Forum). (home.treasury.gov) While this is not a high-frequency macro driver, it’s relevant context: policy messaging is oriented toward trade/industrial strategy, which can influence inflation dynamics (tariffs, supply chains) and investment incentives over time.

Labor market context: Commentary around the May jobs report emphasizes that payroll growth beat expectations and that the Fed’s June meeting is the next key policy waypoint. (kiplinger.com) For recession timing, this is the central tension: jobs data says “not yet,” while temporary help/freight/sentiment say “watch closely.”

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Near-Term Outlook (Next 30 Days)

The next 30 days are about confirmation: do weak leading indicators finally show up in claims, spending, and hiring—or does the economy glide through with slower-but-positive growth?

Key catalysts:

• June 12, 2026: UMich preliminary June sentiment (your key watch).
  A rebound would reduce near-term downside tail risk; another leg down would raise the probability of a consumption stall in Q3.
• Weekly claims: focus on the 4-week average and continued claims. One hot week doesn’t matter; a trend break does.
• June 16–17, 2026 FOMC: the meeting itself, the statement, and the press conference tone. (federalreserve.gov)
  The “risk” scenario is guidance that leans hawkish (or refuses to validate easing) while consumer conditions soften.
• Inflation follow-through: if energy keeps accelerating after the May CPI energy surge, it becomes a real income tax and a sentiment accelerant.

Base case (next 30 days): risk score holds in the low-to-mid 30s unless sentiment collapses further and claims begin trending higher.

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Long-Term Outlook (3-6 Months)

Over 3–6 months, the recession question hinges on whether the economy is entering a late-cycle slowdown with stable employment, or a consumer-led contraction once buffers run out.

The constructive case:

• Sahm Rule remains far from trigger (0.10) and unemployment is not breaking higher quickly.
• Credit spreads and NFCI stay calm, allowing refinancing and risk asset support to continue.
• Housing is slowing but not collapsing—limiting a classic housing-led recession channel.

The fragile case:

• Savings rate at 2.6% is the macro equivalent of “thin ice.” Any combination of higher energy costs + weaker hiring + tighter consumer credit can cause spending to retrench.
• Leading labor (temporary help) and goods-cycle measures (freight, copper/gold) are already consistent with a sharper slowdown than GDP prints show.
• Equity valuations (especially tech-heavy ratios) raise the risk that a financial conditions shock could occur even without a credit blowout—if earnings expectations reset.

Historical parallel: many “soft landing” attempts fail not because spreads explode first, but because the consumer finally capitulates after a long erosion of sentiment and buffers—then labor catches down with a lag. Today’s dashboard has that same sequencing risk.

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What to Watch

Hard thresholds (these would move the score quickly):

• Sahm Rule: sustained rise toward 0.30+ would be an early warning; 0.50 is the trigger.
• Initial claims (4-week avg): a sustained move toward 240k–260k would signal a genuine labor turn rather than noise.
• HY OAS: widening beyond ~350–400 bps would indicate credit is starting to price recession risk.
• Consumer sentiment: another “floor break” in the June 12 prelim would raise odds of a spending air-pocket.
• Temporary help: continued contraction is a high-signal recession lead; stabilization would be a meaningful improvement.

Event calendar:

• June 12, 2026: UMich preliminary sentiment (your highlighted catalyst).
• June 16–17, 2026: FOMC meeting (calendar-confirmed). (federalreserve.gov)
• Ongoing: weekly claims every Thursday; watch for multi-week trend changes.

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Sources

No data available for this window.