Recession Risk 38/100 — June 23, 2026
US recession risk over the next 90 days is MODERATE, not imminent. The top real-time trigger (Sahm Rule) remains well below the 0.50 recession threshold (your reading: 0.10), and labor-market high-frequency data are still consistent with expansion: May payrolls were +172k with unemployment at 4.3%, and weekly initial claims are still around the mid-200k range (e.g., 226k reported for the week ended June 13). Financial conditions remain easy and market stress is muted (tight high-yield spreads and low VIX), while the yield curve has re-steepened to a positive 2s10s spread (e.g., ~+27 bps on your tracker; ~+27 bps on June 18 using 10Y 4.46% vs 2Y 4.19%). The main recession risk is a consumer/goods-side rollover signal set (crisis-level sentiment, very low savings, temp-help contraction, weak freight) that can hit activity quickly if it bleeds into layoffs/claims and credit spreads.
Recession Risk Score: 38/100 — MODERATE (+4 vs 30 days ago)
Today’s Recession Risk Score is 38/100 (MODERATE), up +4 points versus 30 days ago (34 → 38). The headline message remains: recession risk over the next 90 days is not imminent, but the balance of risks is tilting upward at the margin. The model is being pulled in two directions—labor and financial conditions still look expansionary, while consumer/goods-cycle fragility (sentiment, savings, temp-help, freight) is signaling a thinner buffer if shocks hit.
Score Trend — Last 30 Days
Over the last 30 days (2026-05-24 → 2026-06-23), the score rose from 34 to 38 (+4), with a 34–44 range and a 37 average. The profile is best described as range-bound but jumpy: multiple reversions back to 34, punctuated by sharp spikes to 44.
The shape implies fragility rather than deterioration. In other words: the economy isn’t clearly rolling into contraction, but the system is increasingly sensitive to confirmation signals (claims, spreads, housing). The last 10 readings show repeated “risk-on/risk-off” rotations—34 → 38 → 34 → 37 → 34 → 38 → 44 → 34 → 44 → 38—which is typical when the market is calm but the real economy has pockets of stress that haven’t yet infected hiring.
Key Drivers
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Labor market remains the main stabilizer (for now)
- Initial jobless claims: 226K (week ended June 13, 2026)—still consistent with expansion and historically low layoff levels. (apnews.com)
- Sahm Rule: 0.10 (SAFE)—well below the 0.50 trigger, indicating unemployment is not accelerating in a recessionary pattern.
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Yield curve is positive—but the “post-inversion steepening” regime matters
- 2s10s: +0.27% (~+27 bps) (WATCH): no current inversion signal.
- However, a steepening curve after inversion can sometimes reflect growth fears shifting into the front end (i.e., cuts expected) or term premium dynamics. In this cycle, it’s a watch, not an all-clear.
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Leading indicators aren’t confirming recession
- Conference Board LEI: +0.1% m/m in May 2026; six-month change +0.9%—positive momentum in the leading aggregate is a meaningful offset to the consumer/goods warning cluster. (conference-board.org)
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Financial conditions are easy; credit stress remains muted
- Chicago Fed NFCI: -0.51 (SAFE)—loose conditions.
- High-yield OAS: ~266 bps (SAFE)—tight spreads, little market-implied default stress. (FRED shows HY OAS around this level mid-June.) (fred.stlouisfed.org)
- This matters because credit usually breaks before jobs in classic recession setups.
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Consumer/goods-side “fast shock” risk is the main downside
- UMich sentiment: 49.8 (DANGER)—crisis-level pessimism.
- Personal savings rate: 2.6% (DANGER)—low buffer against inflation/energy/credit shocks.
- Temp help: 2,490K (DANGER) plus Freight index: 0.5 (DANGER)—classic early-cycle deterioration signals.
- These don’t guarantee recession, but they raise the odds that a negative impulse translates quickly into layoffs if demand cracks.
Category Breakdown
Using the signal counts provided:
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Primary Indicators: 3 safe / 4 watch / 2 danger
Mixed: the primary set is not recessionary overall, but there are enough watch/danger readings to keep the score in MODERATE. -
Secondary Indicators: 2 safe / 0 watch / 1 danger
Secondary indicators lean constructive, suggesting the slowdown signals are not yet broad-based. -
Housing & Construction: 0 safe / 1 watch / 1 danger
Housing is a meaningful weak spot. Permits (watch) and starts (warning/danger depending on cut) point to a sector that could amplify risk if credit tightens. -
Business Activity: 2 safe / 1 watch / 0 danger
Business activity is holding up—consistent with “slow growth” rather than contraction. -
Consumer Credit Stress: 0 safe / 3 watch / 1 danger
This is one of the most important “next domino” areas: delinquency/DSR stress can move from watch to danger quickly when employment softens. -
Market Signals: 7 safe / 2 watch / 5 danger
Markets are broadly calm (VIX, spreads) but valuation/market-to-GDP style metrics are flashing danger—this increases drawdown vulnerability even if the macro backdrop hasn’t broken. -
Liquidity: 0 safe / 1 watch / 2 danger
Liquidity conditions are less comfortable than headline financial conditions suggest—this raises tail risk if a shock forces deleveraging. -
Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
High-frequency is split: claims are fine, but the “fast cycle” signals (goods/consumer) remain concerning.
Biggest Movers
Top 5 indicators by absolute 7-day % change:
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Bank Unrealized Losses ($5,155B): +931.1% (7D)
Confirmatory (worsening risk)—a jump like this increases vulnerability to a liquidity shock. (Also note the magnitude looks “data-artifact-like” versus prior prints; treat as a stress flag until the next updates confirm.) -
ON RRP Facility ($4B): -99.6% (7D)
Confirmatory (worsening risk)—a depleted ON RRP reduces a ready pool of short-term liquidity absorbency; it can coincide with tighter money-market plumbing. -
GDP Growth (QoQ annualized) (1.6%): -76.2% (7D)
Confirmatory (worsening risk)—signals a downshift in the growth baseline, even if still positive. -
US Interest Expense ($1,219B): +29.2% (7D)
Confirmatory (worsening risk)—fiscal interest burden rises reduce future policy flexibility and can crowd out other spending. -
VIX (16.8): -24.8% (7D)
Contradictory (improving risk)—market stress is fading, which typically aligns with easier financial conditions and continued expansion.
90-Day Indicator Trends
Your “90-day history” window provided contains many series with observations clustered in late March–mid April, so trend inference is strongest where the direction is clear and where today’s level is meaningfully different.
Labor / real-time
- Initial claims moved from roughly 205K–210K in late March to ~219K by mid-April in your history, and stands at 226K today—an upward drift, but still not at “recessionary” levels. If this pushes sustainably above ~250K, risk would likely reprice quickly. (apnews.com)
- Unemployment rate eased from 4.4% (late March) to 4.3% (early April) and remains 4.3% today—stable, and consistent with the low Sahm Rule reading.
Consumer buffer
- Personal savings rate fell from ~4.5% (late March/early April) to ~4.0% by mid-April in your history, and is 2.6% today—that’s the cleanest “buffer deterioration” signal in the whole dashboard. A low savings rate doesn’t cause recession by itself, but it makes consumer demand more shock-sensitive.
Credit & financial conditions
- High-yield spreads improved (tightened) from the low ~320 bps area (late March) to the high 200s in mid-April; today you’re tracking ~266 bps, consistent with benign credit conditions. (FRED shows ~2.66% around June 15.) (fred.stlouisfed.org)
- NFCI stayed loose in your history (around -0.48 to -0.43). Today’s -0.51 remains easy—this is still a major recession-offset.
Housing
- Your historical snapshot shows starts ~1,487K and permits ~1,376K–1,386K in late Mar–mid Apr; today starts 1,177K and permits 1,413K imply a downshift in starts with permits only modestly improved. Housing weakness is consistent with a slow-growth regime and becomes dangerous if it couples with wider spreads and rising claims.
Goods cycle / business cycle early warnings
- Temp help remained in danger in the provided history (~2,447K–2,475K) and is 2,490K today—still weak and consistent with late-cycle labor hoarding/softening demand for flexible labor.
- Freight in your history worsened from -0.5 to -0.6 and remains DANGER today—goods movement remains soft.
Net: the last ~90 days of signals look like “slow growth with a thin consumer cushion”, rather than a classic recession roll where claims jump, spreads widen, and LEI turns decisively negative.
Stock Screener Signals
Today’s screener is dominated by “value dividend” flags—ARCC, AIG, BBY, FNF, HMC, T, BCE, LTM—plus a smaller pocket of oversold growth (CHTR, TLK) with low RSI readings. The macro read-through: investors (and factor models) are leaning toward cash-flow durability and income, consistent with a market that is not pricing a near-term recession, but is preferring resilience.
Two notable nuances:
- High dividend yields shown (e.g., 1002%, 654%) are mechanically extreme and likely reflect special distributions, data quirks, or trailing calculation distortions. Don’t interpret them literally; interpret them as “high payout/financial yield exposure.” In a MODERATE risk environment, these screens often pick up defensive carry and rate-sensitivity.
- The oversold growth flags (e.g., CHTR RSI 28) suggest idiosyncratic drawdowns are appearing even while indexes sit near highs. That divergence fits the broader macro picture: calm headline financial conditions with pockets of stress beneath the surface.
Latest Economic Developments
Labor data (last week, still the cleanest real-time macro input):
- The Department of Labor reported initial jobless claims at 226,000 for the week ended June 13, 2026, down slightly week-over-week and consistent with a still-healthy labor market. (apnews.com)
Leading indicators:
- The Conference Board reported the LEI rose +0.1% in May 2026 and its six-month change is +0.9%, supporting the view that the forward-looking composite is not currently recession-confirming. (conference-board.org)
Federal Reserve (policy backdrop):
- At the June 17, 2026 meeting (Chair Kevin Warsh’s first as chair), the Fed kept rates unchanged, while commentary and coverage emphasized a more inflation/price-stability-forward posture and shifting expectations around the path of rates later in 2026. (axios.com)
- For recession risk, the key takeaway is that policy is not actively tightening right now, but the reaction function may be less “growth-insurance” oriented if inflation risks persist.
Credit spreads (market stress):
- High yield remains tight by historical recession standards—FRED shows HY OAS around ~2.66% in mid-June—consistent with your ~266 bps reading and a market not pricing broad default stress. (fred.stlouisfed.org)
Near-Term Outlook (Next 30 Days)
Base case: MODERATE risk holds unless labor or credit confirms.
What could push the score higher (toward Elevated/High) quickly:
- Initial claims: a sustained move above ~250K, especially if continuing claims trend up in parallel (rising duration of unemployment).
- Sahm Rule: acceleration toward 0.30+ would be an early warning that unemployment is rising fast enough to matter.
- HY spreads: a decisive move from the mid/high-200s toward 350–400 bps would be a strong confirmation that credit risk is repricing.
What could pull the score lower:
- Stabilization/improvement in the consumer buffer cluster: sentiment bottoming, savings rate recovering, and temp-help leveling off.
- Continued positive LEI readings, reinforcing “slow growth” rather than contraction.
Calendar-wise, the next month is primarily about incremental confirmation: weekly claims prints, any updates to real activity nowcasts, and whether markets continue to reward risk assets despite weak goods/consumer internals.
Long-Term Outlook (3-6 Months)
The 90-day pattern suggests a regime of “two-speed” macro:
- Services/labor/financial conditions: still supportive of expansion.
- Goods/consumer buffers: fragile enough that a shock could transmit into layoffs.
Historically, recessions tend to arrive when at least two of these three simultaneously break:
- labor (claims/unemployment), 2) credit (spreads/bank stress), 3) housing/investment.
Right now, only housing is meaningfully soft, and even there, the credit channel remains calm. That is why the score is MODERATE, not HIGH.
However, the structural concern is that consumer resilience looks thinner than in prior expansions: with savings low and sentiment depressed, the economy may have less shock absorption. That increases the probability that a modest negative impulse (energy, geopolitical, credit-card stress, or business confidence) shows up first in temp-help and freight, and then spills into claims.
What to Watch
Fast triggers (highest signal-to-noise)
- Weekly initial claims: watch for ≥250K sustained; red flag ≥275K.
- Continuing claims: trend matters more than single prints—look for persistent climbs.
- Sahm Rule: watch for acceleration toward 0.30–0.40.
Credit & liquidity
- HY OAS: watch for ≥350 bps (risk rising), ≥450 bps (stress regime).
- Bank unrealized losses: confirm whether the recent jump is real or a data artifact; a persistent rise increases tail risk.
Housing
- Starts/permits: continued downshift + any spread widening is the classic recession “combo.”
- A key threshold is whether starts remain stuck near/below ~1.2M while permits fail to re-accelerate.
Consumer stress
- Savings rate: any further decline from 2.6% increases downside convexity.
- Credit card delinquencies: watch for a step-up that coincides with weaker hiring.