Recession Risk 38/100 — June 24, 2026

Recession Risk Score: 38/100 — MODERATE (+0 vs 30 days ago)

Today’s Recession Risk Score is 38/100 (MODERATE), unchanged versus 30 days ago. The headline is a familiar one: the labor-market recession trigger remains clearly inactive, even as pockets of the goods economy and household balance sheets look increasingly fragile. Financial conditions are still loose and credit is still cooperative, which keeps the near-term “sudden stop” risk contained. The key question for the next month is whether softness in temp help/freight finally translates into a persistent uptrend in claims—the fastest path for this score to re-rate higher.

Score Trend — Last 30 Days

The last 30 days were range-bound but jumpy: Start 38 → End 38 (Δ 0), with a 34–44 min/max band and a 37 average across 31 samples. The pattern is consistent with a macro tape that is not breaking, but where single data points (or market moves) can still swing the risk read temporarily into the low-40s.

The shape looks mean-reverting rather than accelerating: dips to 34 were quickly offset by rebounds to 44, and the most recent sequence (38, 34, 37, 34, 38, 44, 34, 44, 38, 38) shows volatility without follow-through. That is typical of an environment where primary recession triggers (claims/Sahm/credit spreads) remain benign, while secondary/leading signals (temp help, freight, sentiment, metals ratios) keep pressing caution.

Key Drivers

1. Real-time labor trigger remains inactive (core “recession tripwire” is still SAFE).

   • Sahm Rule: ~0.10 (SAFE) vs. the 0.50 trigger.
   • Initial jobless claims: 226k (SAFE) for the week ending June 13, 2026.
   • The 4-week moving average is ~223k, still consistent with a stable labor market rather than a broad-based layoff cycle. (tradingeconomics.com)

2. Yield curve normalization reduces near-term recession odds.

   • 2s10s: ~+0.34 (your dashboard) and 2s30s: ~+0.71: the curve is positive, not inverted.
   • In this framework, that matters because inversion is a powerful medium-lead warning; re-steepening reduces the base rate of a near-term contraction call (though steepening can also happen late-cycle if short rates fall quickly—not the case yet given the Fed is on hold).

3. Credit remains calm; financial conditions are still loose (no credit-led accident signal).

   • HY OAS: ~265 bps (SAFE)—tight by historical standards, inconsistent with imminent stress transmission.
   • Chicago Fed NFCI: -0.51 (SAFE)—conditions remain easy.
   • This combination typically suppresses recession odds unless/ until labor rolls over.

4. Growth is slowing, but nowcasts still point to expansion—mixed with “policy-hawkish” Fed messaging.

   • GDP growth (Q1 2026, 2nd estimate): +1.6% SAAR (your “1.6% watch” aligns with BEA’s published figure). (bea.gov)
   • Atlanta Fed GDPNow for Q2 2026: 3.0% (June 17)—stronger than your 1.8% reading and a meaningful counterweight to recession narratives. (atlantafed.org)
   • The Fed held the funds rate at 3.50%–3.75% on June 17 and implementation details confirm the stance—still restrictive vs. neutral, and potentially “higher-for-longer” if inflation remains sticky. (federalreserve.gov)

5. Household fragility is the dominant downside risk (low savings + depressed sentiment + rising delinquency).

   • Personal savings rate: 2.6% (DANGER)—“no buffer” dynamics if incomes soften.
   • UMich sentiment: 49.8 (DANGER)—recession-like psychology even without recession-like labor data.
   • Credit-card delinquency: 2.9% (WATCH)—not crisis, but directionally consistent with late-cycle strain.

6. Goods-economy leading signals are flashing caution (and they’re the usual early movers).

   • Temporary help: 2,490k (DANGER)—historically a reliable early warning for labor softening.
   • Freight index: 0.5 (DANGER)—transport weakness fits a slowing goods cycle.
   • Copper/gold: 0.00077 (DANGER)—extreme risk-off signal for industrial sensitivity (often more “global fear” than “US recession,” but still a caution flag).

Category Breakdown

Using your category counts:

• Primary Indicators: 3 safe / 4 watch / 2 danger
  The core set is mixed but not broken: labor triggers are safe, while household buffers (savings) and select labor internals (temp help) keep the “watch the next step” posture.

• Secondary Indicators: 2 safe / 0 watch / 1 danger
  Secondary signals are not confirming a recession call today, but they aren’t uniformly supportive either—this is “moderate risk” territory.

• Housing & Construction: 0 safe / 1 watch / 1 danger
  Housing is soft (starts weak; permits slowing). This matters because housing often leads turning points, but it typically needs labor deterioration to translate into a broad contraction.

• Business Activity: 2 safe / 1 watch / 0 danger
  Business activity is holding up on aggregate, which is consistent with the expansionary PMI impulse and resilient top-line demand.

• Consumer Credit Stress: 0 safe / 3 watch / 1 danger
  This is one of the clearest problem clusters: delinquencies and debt service metrics aren’t flashing red across the board, but the lack of savings is a genuine vulnerability if the job market cools.

• Market Signals: 7 safe / 2 watch / 5 danger
  Markets are sending a split message: index levels and volatility look benign, while valuation-to-GDP style ratios and select risk proxies flag froth/overextension.

• Liquidity: 0 safe / 1 watch / 2 danger
  Liquidity is a quiet risk factor. Your read of a depleted ON RRP suggests less “cash on the sidelines” in that facility; this doesn’t automatically imply stress, but it does reduce a buffer that previously absorbed liquidity fluctuations.

• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
  High-frequency data are not confirming recession, but they are not cleanly improving either—consistent with a “moderate, monitoring” posture.

Biggest Movers

Top 5 by absolute 7-day % change (from your block) and how to read them:

1. Conference Board LEI: -117.4% (7D) — Confirmatory (worsening risk)
   A sharp 7D swing in your LEI series is a risk-positive (bad) move if real, but the magnitude strongly suggests data-series discontinuity/scale effects rather than a macro regime change. (Still: directionally, LEI is a key leading gauge, so treat any sustained deterioration as meaningful.)

2. Yield Curve (2s30s): -81.7% (7D) — Potentially confirmatory, but ambiguous
   A large percentage change on a small base can be misleading. The level remains positive, so recession risk impact depends on whether the move reflects bear flattening (growth optimism + inflation risk) or risk-off flattening (growth fear). Net: watch, not a recession trigger by itself.

3. ON RRP Facility: +72.9% (7D) — Contradictory (slightly improving risk)
   Rising usage can indicate more cash parking at the Fed (context-dependent). Given your level is extremely low (single-digit billions), a large % move is not the same as a meaningful liquidity shift. Mildly stabilizing at best.

4. VIX: -30.4% (7D) — Contradictory (improving risk)
   Falling volatility is typically anti-recession near-term (markets are not pricing immediate stress). The caveat: very low vol can also indicate complacency, but it is not a recession “confirming” signal.

5. GDP Growth (QoQ SAAR): -28.6% (7D) — Confirmatory (worsening risk)
   Growth softening supports the “slowing” narrative. But the macro cross-check is important: the Atlanta Fed GDPNow reading around 3.0% (as of June 17) argues against an imminent collapse. (atlantafed.org)

90-Day Indicator Trends

Your 90-day history (sampled through late March to mid/late April for many series) shows a consistent story: labor headline stability, goods-economy deterioration, household buffer erosion, and markets levitating.

Labor: stable headline, softer internals

• Initial claims moved from ~205k (Mar 26) to ~207k (Apr 18) in your history—still low and non-recessionary in level terms.
• Sahm Rule improved from 0.27 (Mar 26) to 0.20 (Apr 18) in your history (and you now cite ~0.10). That is the opposite of a recession acceleration.
• JOLTS quits slipped from 2.0% (Mar 26) to 1.9% (early April onward)—a meaningful sign of reduced worker confidence and bargaining power, consistent with late-cycle cooling.

Interpretation: The recession model remains hostage to claims. Temp help and quits can warn early, but unless claims trend up for multiple weeks, recession odds stay moderate rather than elevated.

Household buffers: the weak link

• Personal savings rate fell from 4.5% (late Mar/early Apr) to 4.0% (mid-Apr in your history) and is 2.6% today. That’s a material deterioration in the margin of safety for consumers.
• Credit stress (credit-card delinquency and debt service ratio) was steady-to-elevated in your history window and remains in WATCH today—consistent with “manageable but worsening” pressure.

Interpretation: If labor softens, this is the channel that can transmit quickly into spending cuts—especially discretionary goods, travel, and services tiers that are most sensitive to cashflow and revolving credit.

Goods economy / cyclical leads: consistently negative

• Freight index sat at -0.5 to -0.6 (danger) across late March to mid-April in your history—persistent weakness.
• Copper/gold ratio was pinned at 0.00077 (danger) throughout the history block—extreme defensive pricing.
• Temporary help rose from ~2447k (Mar 26) to ~2475k (April) in the history block, but today’s 2,490k (danger) is flagged as “sharp decline” in your current readings—suggesting the trend beyond the block turned down again.

Interpretation: This is the “smoke” that could become “fire” if it bleeds into claims.

Financial conditions / risk assets: still supportive

• NFCI stayed negative (easy) and broadly stable in your history—no sign of systemic tightening.
• Credit spreads in your history tightened from ~320 bps toward the high-200s/low-300s range, but with some noise; today you show ~265 bps, still tight.
• Equities rose meaningfully in your history block (S&P 500 from ~6592 to ~7023; Nasdaq from ~21930 to ~24103) and your “today” levels are higher still—risk appetite remains intact.

Interpretation: Without a credit shock, recessions tend to require labor deterioration. Today, markets are not pricing that imminent turn.

Stock Screener Signals

Today’s quant screen is dominated by “value dividend” flags (ARCC, AIG, BBY, FNF, HMC, T, LTM, BCE) plus a couple of “oversold growth” flags (CHTR, TLK). The macro implication: investors are still looking for carry and valuation support, but the presence of oversold growth names suggests selective stress under the surface rather than broad risk-off.

Two important read-throughs for recession risk:

1. Defensive carry and balance-sheet sensitivity are in focus.
   Financials/insurers (AIG), telecom (T, BCE), and credit/BDC exposure (ARCC) point to a market positioning that wants income and stability, but is still willing to own credit risk—consistent with tight HY spreads and easy conditions. If recession risk were genuinely spiking, you’d expect less comfort holding credit-sensitive yield.

2. Consumer discretionary value showing up is a tell.
   Best Buy (BBY) flagged with a low RSI hints at ongoing caution around goods demand—consistent with the weak freight/temp help signals. This is not a recession call by itself, but it aligns with the “goods economy is the soft spot” theme.

(One note for your production pipeline: the quoted dividend yields like “1002%” are almost certainly data artifacts or special distribution math; the macro takeaway is still “yield factor showing up,” but you may want to sanitize those fields.)

Latest Economic Developments

Fed: policy on hold, messaging less dovish. On June 17, 2026, the FOMC held the target range at 3.50%–3.75%. The official Fed release confirms the target range and the implementation note reiterates operating details (including the primary credit rate at 3.75%). (federalreserve.gov) The market interpretation over the last week has tilted toward “pause, but not pivot”, which matters because a higher-for-longer stance can tighten financial conditions eventually even if today’s NFCI remains loose.

PMIs: activity firm, but employment inside manufacturing is soft. Reuters coverage of the S&P Global US flash PMIs (June) highlights a rise in manufacturing activity (flash manufacturing PMI 55.7, up from 55.1) and a modest improvement in services (flash services PMI 51.3 from 50.7), while flagging a drop in factory employment to a multi-year low. (marketscreener.com) This split—output strength but labor caution—fits today’s dashboard: expansionary activity signals coexisting with labor-internals deterioration (quits/temp help).

Leading indicators: modest improvement in May, not a recession imprint. The Conference Board reported the LEI rose 0.1% in May 2026 after rising 0.2% in April, with the next release scheduled for July 20, 2026. (prnewswire.com) This is a key cross-check against any single-series volatility you’re seeing in the “Biggest Movers” block.

Nowcast growth: Atlanta Fed GDPNow remains supportive. The Atlanta Fed’s GDPNow estimate for Q2 2026 was 3.0% on June 17 (up from 2.8% June 16), reinforcing that “slowing” is not yet “stalling.” (atlantafed.org)

Near-Term Outlook (Next 30 Days)

Base case for the next month: risk score stays in the mid-to-high 30s unless the labor tape turns. The model’s most important near-term pivot is whether claims stop being “low and stable” and become “rising and persistent.”

Key catalysts (next 30 days) that can move the score:

• Weekly initial jobless claims (every Thursday):
  Watch for a regime shift from the low-220s/230s zone to a sustained break higher. A decisive move above ~250k for multiple prints would be the fastest way to push the score into ELEVATED.

• BEA GDP (Q1 2026 third estimate) release: June 25, 2026
  BEA’s calendar shows the next GDP release is June 25, 2026. (bea.gov) Any material revision lower would amplify “slowing” concerns, though GDP tends to be a lagging confirmation relative to claims/credit.

• Follow-through from PMI employment signals:
  If the “factory employment down” PMI detail persists and broadens to services employment, it would strengthen the case that temp help weakness is not isolated.

• Credit spreads and volatility:
  A move from ~265 bps HY OAS toward the mid-300s would be a meaningful warning that markets are starting to price default risk and refinancing stress.

Long-Term Outlook (3-6 Months)

Three forces will determine whether “moderate” becomes “elevated” later in 2026:

1. Household buffer depletion vs. income stability.
   A 2.6% savings rate is the macro equivalent of “thin ice.” If payroll growth slows and unemployment drifts higher even modestly, the consumer can pivot quickly from resilient to retrenching—particularly for discretionary goods, which is already where the leading cracks (freight/temp help) are appearing.

2. Policy path: restrictive hold can become tightening via time, not action.
   Even if the Fed stays at 3.50%–3.75%, policy can tighten in real terms if inflation falls slowly or growth cools. Conversely, if inflation re-accelerates (energy/supply pressures), the Fed’s stance could remain firm for longer, increasing the probability that the labor market eventually gives way.

3. Credit transmission remains the swing factor.
   Today, credit is not flashing stress. Historically, the highest-confidence recession calls come when labor deterioration and credit widening appear together. If we get only the “goods economy is weak” story without credit spread confirmation, recessions are less likely and typically milder/avoided.

Net: the 90-day direction of travel in your leading cyclical indicators argues risk is not going away, but the absence of labor/credit confirmation argues no imminent contraction.

What to Watch

Concrete thresholds and events that would change the score materially:

• Labor trigger (highest priority):

  • Initial claims: sustained move >250k, then >275k (acceleration signal)
  • Sahm Rule: acceleration toward 0.30, then 0.50 (trigger)

• Credit stress confirmation:

  • HY OAS: sustained widening >350 bps, then >450 bps
  • Bank/liquidity stress: any abrupt tightening in broad financial conditions (NFCI moving sharply upward toward/above zero)

• Consumer stress:

  • Savings rate: staying near ~2–3% while delinquencies rise is a classic late-cycle setup
  • Sentiment: if depressed sentiment begins to show up in hard spending data (retail sales/services demand)

• Growth confirmation:

  • BEA GDP on June 25, 2026 for revisions and composition (consumption vs. inventory vs. net exports). (bea.gov)
  • Atlanta Fed GDPNow: watch whether the nowcast rolls over with incoming data updates. (atlantafed.org)

Sources

No data available for this window.