Recession Risk 36/100 — June 25, 2026
US recession risk over the next 90 days is MODERATE (score 36): the labor market remains firm and broad financial conditions are still loose, but the goods side is fragile and consumer psychology is extremely weak. The Sahm Rule remains well below trigger (your read: 0.10), and weekly initial jobless claims are still low at 226k (week ending June 13, 2026), which argues against an imminent downturn. The yield curve has re-steepened (2s10s positive; e.g., 10Y 4.46% vs 2Y 4.19% as of June 23, 2026), and high-yield spreads remain tight (~2.78%), both consistent with continued expansion. The main near-term recession tail risks are consumer exhaustion (very low savings rate per your tracker), negative freight/temporary-help signals, and a potential confidence shock from the Middle East/energy channel even as the Fed stays on hold (June 17, 2026: target range held at 3.50%–3.75%).
Recession Risk Score: 36/100 — MODERATE (+2 vs 30 days ago)
Today’s Recession Risk Score is 36/100 (MODERATE), up +2 points from 30 days ago (34 on May 26, 2026). The topline message remains “slow growth, not imminent recession”: labor-market stress signals are still contained, and broad financial conditions remain loose. But the composition of the risk is getting less comfortable—weak consumer psychology, late-cycle goods indicators (freight, temp help), and depleted money-market plumbing buffers keep the distribution of outcomes skewed to the downside.
Score Trend — Last 30 Days
The last 30 days show a modest net increase in recession risk with high intramonth volatility. The score started at 34 (May 26) and ends at 36 today (June 25), with a range of 34 to 44 and an average of 37 over 31 samples. That range matters: despite a “MODERATE” label, the tape has repeatedly flirted with a higher-risk regime.
The shape looks choppy and event-driven rather than a smooth deterioration. Over the last 10 readings, we saw two spikes to 44 (June 20 and June 22) that quickly mean-reverted back to the mid-30s. That pattern is consistent with a macro backdrop where the economy is still expanding, but fragile confidence + late-cycle goods weakness makes the risk score sensitive to shocks (energy headlines, funding stress, or a sudden change in labor market momentum).
Key Drivers
1) Labor market still blocks the “imminent recession” narrative (for now)
- Sahm Rule: 0.10 (SAFE), far below the 0.50 trigger.
- Initial claims: 226K (SAFE) (week ending June 13, 2026 per your tracker).
These two together say: no broad-based labor rollover has arrived, and recession calls remain premature until claims trend breaks higher for multiple weeks and unemployment acceleration becomes persistent.
2) The yield curve’s re-steepening is supportive—but not a free pass
- 2s10s: +0.30 (WATCH) and 2s30s: +0.78 (SAFE).
A positive curve again aligns with “expansion/soft-landing” probabilities rather than “near-term recession,” but the WATCH flag is appropriate: steepening can occur from falling short rates (future easing) or rising term premium (risk and inflation). The macro meaning depends on why it steepened.
3) Credit markets remain calm: tight HY spreads keep risk contained
- High Yield OAS: 271 bps (SAFE) (tight).
Historically, when recession is imminent, HY spreads typically blow out well beyond “tight” territory. Your key threshold—~4%+ (400 bps)—remains a useful tripwire.
4) The consumer is the soft underbelly: savings and sentiment are recession-grade
- Personal Savings Rate: 2.6% (DANGER)
- UMich Consumer Sentiment: 49.8 (DANGER)
This is the clearest “tail risk” setup: even with jobs holding up, a consumer that is psychologically bearish and financially thin can pull back spending abruptly if hit by an energy/inflation shock or a labor scare.
5) Late-cycle goods/economy warnings are flashing despite PMI optimism
- Temporary Help Services: 2490K (DANGER)
- Freight Transportation Index: 0.5 (DANGER)
- Versus ISM Manufacturing PMI: 54.0 (SAFE) (May release, per your summary).
Temp help and freight often weaken earlier than the headline labor market. The tension here (PMI expansion vs. real-economy transport/contingent-labor weakness) is exactly why the score sits in MODERATE: the system is not confirming recession, but it is not “clean” either.
6) Liquidity plumbing: ON RRP depletion reduces shock absorbers
- ON RRP: $5B (WARNING) (effectively depleted).
A near-empty RRP facility can be consistent with healthy risk appetite, but it also removes a prior liquidity buffer that, in past episodes, helped absorb collateral/funding fluctuations. In an event-driven market, less buffer = more potential for short, sharp tightening.
Category Breakdown
- Primary Indicators (3 safe / 4 watch / 2 danger): Mixed. Labor-trigger indicators are still mostly benign (Sahm/claims), but growth is slowing (GDP/GDPNow WATCH) and fiscal metrics are increasingly restrictive in the background.
- Secondary Indicators (2 safe / 0 watch / 1 danger): Mostly supportive, but the single danger reading is a reminder that secondary composites can turn quickly once labor cracks.
- Housing & Construction (0 safe / 1 watch / 1 danger): Housing is weakening (starts WARNING; permits WATCH), consistent with “late-cycle drag” rather than a re-acceleration.
- Business Activity (2 safe / 1 watch / 0 danger): Still broadly okay—profits and manufacturing signal expansion, but not enough to offset consumer stress.
- Consumer Credit Stress (0 safe / 3 watch / 1 danger): Rising strain shows up in delinquencies and debt-service measures; this is a classic “slow burn” vulnerability.
- Market Signals (7 safe / 2 watch / 5 danger): Markets are near highs with low vol, but valuation-to-GDP and cyclically sensitive ratios (e.g., NASDAQ/GDP) remain stretched, increasing fragility to shocks.
- Liquidity (0 safe / 1 watch / 2 danger): Liquidity is the quiet risk amplifier: depleted RRP and other liquidity warnings raise the probability that a macro shock transmits faster.
- Real-Time / High-Frequency (0 safe / 1 watch / 1 danger): High-frequency signals are not uniformly recessionary, but freight/transport weakness keeps this bucket from clearing.
Biggest Movers
From your 7-day % change list:
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NY Fed Recession Probability (9.2%): +143.9% (7D) — Confirmatory (worsening risk)
Even from a low base, a jump of this magnitude is a “pay attention” move. It doesn’t mean recession is imminent, but it suggests the probability model is reacting to curve/growth inputs that have become less favorable. -
Conference Board LEI (1.7): -117.4% (7D) — Confirmatory (worsening risk)
The sign flip / sharp drop is consistent with leading indicators losing momentum. Given the noisiness of short windows, treat as an early warning that requires follow-through. -
Bank Unrealized Losses ($5155B): -90.3% (7D) — Contradictory (improving risk, if real)
This would be a major easing of banking-system mark-to-market pressure if it reflects an actual repricing and not a measurement artifact. In the real world, this series typically moves with rate levels and portfolio composition—so this is a “verify and monitor” signal. -
Yield Curve (2s30s) (0.78): -81.7% (7D) — Ambiguous
A big move in slope can reflect either front-end repricing or long-end inflation/term premium. On net, a still-positive curve is supportive, but rapid changes are volatility signals. -
ON RRP Facility ($5B): +72.9% (7D) — Contradictory (slightly improving), but still a WARNING
A small rebound is directionally helpful, yet the absolute level remains so low that it does not restore meaningful buffering capacity.
90-Day Indicator Trends
Your “90-day history” excerpt is partial for some series, but the direction-of-travel is still clear across the indicators that matter most:
Labor: still stable, with mild cooling under the hood
- Initial claims in the history window show ~210K (Mar 28) → ~202K (Apr 3) → ~219K (Apr 12) → ~207K (Apr 18), while today’s reading is 226K. Net: claims are off the lows, but not in a sustained uptrend.
- Sahm Rule eased from 0.27 (Mar 27) to 0.20 (Apr 5 onward) and is 0.10 today—a continued “SAFE” message.
Consumer: deterioration is the dominant macro story
- Personal savings rate dropped from 4.5% (Mar 27) to 4.0% (Apr 11–17) and now sits at 2.6% (DANGER) today—an accelerating drawdown that raises the odds of spending fatigue.
- Consumer sentiment in the history shows ~56.4–56.6 (late Mar / mid-Apr) versus 49.8 today, a sharp step down into “crisis-level pessimism.”
Growth: slowing, not collapsing
- GDP growth (QoQ SAAR) in the history set drifts lower (values shown include 2.1% down to 0.5% by mid-Apr in your series), while today’s dashboard shows 1.6% (WATCH) and GDPNow 1.8% (WATCH). Net: the economy is in a sub-trend zone.
Financial conditions: still loose, but watch the plumbing
- Chicago Fed NFCI moved from about -0.48 (Mar 27) to -0.43 (early Apr) to -0.47 (mid-Apr); today it’s -0.52 (SAFE)—still loose, arguably even looser than the early-window values.
- ON RRP collapsed from ~$80B (late Mar / some early Apr prints) to hundreds of millions in mid-Apr; today it’s $5B—the “buffer” remains largely absent.
Markets: risk assets remain buoyant; valuation risk is rising
- S&P 500 in your history rises from ~6369 (Mar 30) to 7023 (Apr 17–19); today it’s 7365.
- NASDAQ rises from ~21408 (Mar 27) to 24103 (Apr 18–19); today it’s 25477.
The key macro implication: financial conditions remain supportive, but elevated valuation-to-GDP signals increase the odds that any macro shock becomes a market shock, which then feeds back to confidence.
Stock Screener Signals
Today’s screener is dominated by “value dividend” flags—ARCC, AIG, BBY, FNF, HMC, T, LTM, BCE—with a smaller cluster of “oversold growth” (CHTR, TLK) showing low RSI (notably CHTR RSI 28, TLK RSI 30). The macro read is straightforward: the model is seeing cash-flow and valuation support as more attractive than “priced-for-perfection” growth, even while the broader indices remain near highs.
Two additional notes matter for macro interpretation:
- The presence of consumer-facing cyclicals like BBY (Best Buy) alongside defensives/financials suggests the market is not fully pricing a recession, but is increasingly price-sensitive and seeking margin-of-safety.
- The extreme listed yields (triple/quadruple-digit) look like data artifacts (e.g., special dividends, trailing-window distortions). Macro takeaway should focus more on style tilt (value/dividend/mean reversion) than on those raw yield prints.
Latest Economic Developments
Today (June 25, 2026) is a packed U.S. macro release day: weekly jobless claims, May PCE inflation (headline and core), personal income/spending, durable goods, and the third estimate of Q1 GDP are all scheduled for release at 8:30 a.m. ET, per widely published economic calendars. (kiplinger.com)
From the policy side, the Fed held rates at 3.50%–3.75% on June 17, 2026, and the published statement text indicates inflation remains elevated, with energy-related supply shocks explicitly noted as a factor. (federalreserve.gov)
On the geopolitical/energy channel, oil prices have been notably volatile. Reuters reporting carried by MarketScreener says Brent fell sharply on June 24 and extended declines on June 25, with easing shipping/supply concerns referenced (including tanker flows via Hormuz) and prices near pre-war levels. (marketscreener.com) This matters for recession risk in two opposing ways:
- Bullish for growth/inflation mix if it reduces headline inflation and real-income pressure.
- Bearish signal if the decline reflects weakening demand expectations (less consistent with your “financial conditions still loose” read, but worth tracking).
Near-Term Outlook (Next 30 Days)
Base case for the next month remains continued expansion at sub-trend growth, with recession risk constrained until labor breaks. The next 30 days will be dominated by three catalytic lanes:
- Inflation and “Fed patience” credibility
- May PCE/core PCE (released today, June 25) will either reinforce the hold stance or reopen hike risk if sticky. The Fed has already signaled sensitivity to energy-linked inflation dynamics. (yardeni.com)
- Labor trend confirmation
- Weekly claims: watch for a shift from “low but noisy” to a persistent uptrend (e.g., several weeks of higher highs).
- July labor report: your own watch item is correct—recession probabilities rise sharply if unemployment accelerates meaningfully from the low-4s.
- Credit and liquidity tripwires
- HY OAS: a move from ~271 bps toward ~400 bps+ would be an unambiguous tightening signal.
- Liquidity plumbing: with RRP near depleted, the system has less slack; funding stress can show up faster when buffers are thin.
Long-Term Outlook (3-6 Months)
The 3–6 month outlook remains a two-track regime:
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Track A (most likely): slow growth / rolling sectoral weakness without a broad recession. This is consistent with loose NFCI (-0.52), tight HY spreads, positive curve, and still-healthy profits. In this path, recession risk drifts sideways to slightly higher unless consumer stress bleeds into employment.
-
Track B (tail risk): a confidence-to-spending break that forces labor to follow. The preconditions are present: 2.6% savings rate, 49.8 sentiment, rising delinquency stress (2.9%), and late-cycle goods warnings (freight, temp help). In this path, the recession score would likely jump quickly from the 30s into the 50s+ on any combination of: claims uptrend + HY spread breakout + negative spending prints.
Historically, many recessions become “obvious” only when labor confirmation arrives; your current dataset is consistent with that lesson. The key is that consumer fragility raises the probability that labor confirmation could arrive with less warning than usual.
What to Watch
Thresholds and triggers (practical, score-moving):
- Initial claims: sustained move above ~250K with an upward trend over multiple weeks (not a one-week spike).
- Sahm Rule: move toward 0.30 would be an early “regime change” warning; 0.50 is the canonical trigger.
- High Yield OAS: break above ~400 bps (4%) would be a major tightening signal.
- Consumer: any further drop in sentiment with a coincident downturn in real personal income growth would raise near-term recession odds.
- Liquidity: signs of funding stress (repo/short-term rates volatility) with RRP already depleted.
Event calendar (immediate):
- June 25, 2026 (today): PCE/core PCE, GDP (third estimate), personal income/spending, durable goods, jobless claims. (kiplinger.com)
- Ongoing: energy headlines—oil-price shocks can hit both inflation expectations and consumer confidence quickly. (marketscreener.com)
Sources
No data available for this window.