Recession Risk 44/100 — June 28, 2026

Recession Risk Score: 44/100 — ELEVATED (+0 vs 30 days ago)

Today’s Recession Risk Score is 44/100 (ELEVATED), unchanged vs 30 days ago. The dashboard is sending a familiar message: labor and broad financial conditions are still providing cover, but soft-demand and goods-cyclical indicators remain under real pressure. The score is “stuck high” rather than trending higher—yet the distribution of signals is becoming more lopsided (more “danger” in markets/goods while core labor alarms remain quiet). Net: slowdown risk is real; recession risk is elevated but not imminent unless labor cracks.

Score Trend — Last 30 Days

The last 30-day window (2026-05-29 → 2026-06-28) began at 44 and ends at 44 (Δ: +0), with a min of 34, max of 44, and average of 38 (31 samples). The pattern is range-bound but jumpy—frequent whipsaws between mid-30s and the mid-40s, rather than a clean monotonic climb.

The shape reads as mean-reverting with episodic spikes. In practice, that usually means the model is highly sensitive to a few “swing” inputs (often: curve dynamics, probability models, and a small number of high-frequency indicators). The most important takeaway: risk is not accelerating, but the system is also not healing—the score keeps snapping back to the upper end of the range when any “fragile” input worsens.

Key Drivers

1. Labor market alarm remains untriggered (primary stabilizer):

   • Sahm Rule: 0.10 (SAFE) vs 0.50 trigger — the recession “tripwire” is nowhere close.
   • Initial jobless claims: 215k (week ending June 20) with 4-week avg ~224.25k—still historically consistent with a functioning labor market. (apnews.com)
   • Continued claims are described as rising (re-employment slowing), but not yet recessionary.

2. Yield curve is positive, but the type of steepening matters (watch item):

   • 2s10s ~ +0.31 (WATCH) and 2s30s 0.77 (SAFE) remove the classic “inversion” warning.
   • However, the model flags “post-inversion steepening” risk: steepening driven by front-end rate cuts expectations can be recession-confirmatory; steepening driven by term premium growth is different. Today’s read is “watch,” not “danger,” but it’s a key macro hinge.

3. Financial conditions remain loose (shock absorber still present):

   • Chicago Fed NFCI: -0.52 (SAFE) — still clearly “easy” conditions. (equibles.com)
   • High-yield OAS: 278 bps (~2.78%) (SAFE) — tight spreads imply no broad credit stress. (convextrade.com)

4. Soft-demand is deteriorating sharply (demand psychology is broken):

   • UMich sentiment: 44.8 (DANGER) — crisis-level pessimism in your dashboard framing; recent reporting attributes partial improvement later in June to easing gas-price pressure, but the absolute level remains weak. (axios.com)
   • The key macro point: sentiment this low tends to cap discretionary spending unless offset by strong real income gains.

5. Goods-cyclical recession signals are flashing (classic early-cycle-to-downcycle behavior):

   • Freight Transportation Index: 0.5 (DANGER) — contractionary signal in the goods economy.
   • Copper-to-Gold ratio: 0.00077 (DANGER) — your model treats this as extreme industrial pessimism; regardless of level debates, the direction is consistent with “growth fear.”

6. Housing is below-trend and rolling over again (rate-sensitive drag):

   • Housing starts: 1,177k (WARNING) and permits ~1,410k (WATCH) — May printed a sharp drop vs April (starts down meaningfully). (tradingeconomics.com)
   • This matters because housing is one of the most reliable rate-to-real-economy transmission channels, and weakness tends to spill into durables and local employment.

Category Breakdown

Using your CATEGORY BREAKDOWN counts:

• Primary Indicators (3 safe / 4 watch / 2 danger): Mixed. The primary suite is not screaming recession, but it’s not clean—the “watch” cluster suggests fragility if labor cools faster.
• Secondary Indicators (2 safe / 0 watch / 1 danger): Mostly supportive, with one deterioration point that prevents an “all clear.”
• Housing & Construction (0 safe / 1 watch / 1 danger): Clear below-trend signal—housing is not stabilizing yet.
• Business Activity (2 safe / 1 watch / 0 danger): This is the “good news” pocket—hard activity measures are still holding up.
• Consumer Credit Stress (0 safe / 3 watch / 1 danger): The consumer is late-cycle strained—not a crisis, but the buffer is shrinking.
• Market Signals (7 safe / 2 watch / 5 danger): This is the most schizophrenic bucket: indices near highs alongside valuation/ratio danger flags (classic late-cycle behavior).
• Liquidity (0 safe / 1 watch / 2 danger): Liquidity plumbing is less forgiving; depletion dynamics matter more.
• Real-Time / High-Frequency (0 safe / 1 watch / 1 danger): High-frequency is leaning weaker—early warning, not confirmation.

Biggest Movers

Top 5 by absolute 7-day % change (from your BIGGEST MOVERS block):

1. ON RRP Facility ($6B): +15,679.1% (7D)

   • Mechanically enormous % moves because the base is tiny when balances hover near depletion. Qualitatively: plumbing sensitivity is up when the facility is near empty—small flows look huge. This is confirmatory of “tighter liquidity buffers,” not necessarily imminent recession.

2. GDP Growth (QoQ AR) (2.1%): +320.0% (7D)

   • This is contradictory (improving) for recession risk: growth tracking or nowcast-like inputs are stronger than the “soft side.” However, it may reflect volatile revisions/updates rather than durable momentum.

3. NY Fed Recession Probability (9.4%): +159.7% (7D)

   • Confirmatory (worsening), but still low in level—single-digit probabilities don’t scream recession, yet the direction says the curve/model mix is less friendly.

4. Conference Board LEI (1.7): -117.4% (7D)

   • Confirmatory (worsening) as a momentum/leading-growth signal. Note: LEI also printed a modest positive MoM in May in the official release; your internal series behavior looks discontinuous, so treat as “signal volatility,” not just macro deterioration. (conference-board.org)

5. Yield Curve (2s30s) (0.77): -82.1% (7D)

   • Confirmatory (worsening) insofar as rapid curve compression can reflect “growth scare” and/or front-end repricing. Still, the curve remains positive—this is deterioration from “very positive,” not an inversion.

90-Day Indicator Trends

Your 90-day history is incomplete for some indicators (many series show data clustered in late March–April), but enough exists to identify the direction of travel:

• Labor / Sahm Rule:

  • Sahm Rule fell from ~0.27 (Mar 30) → ~0.20 (early-to-mid April) → 0.10 today (SAFE).
  • That’s a clear improvement in the primary near-term recession trigger. The model is essentially saying: “the unemployment acceleration isn’t happening.”
  • Translation: recession risk remains more “shock-driven” than “cycle-completion-driven” right now.

• Claims trend (high-frequency labor cooling, not breakage):

  • In April, initial claims were mostly ~202k–219k; now they’re 215k with a 4-week avg ~224k (your summary).
  • That’s a modest upshift in the rolling average—cooling—but not the kind of step-function move that typically precedes Sahm-rule activation. (dol.gov)

• Financial conditions / credit:

  • NFCI moved looser in the snapshot: roughly -0.43 in early April → ~-0.52 by June 19 (looser = more supportive). (equibles.com)
  • HY OAS tightened from about 321 bps (Mar 30) → ~278 bps (late June), indicating reduced credit stress over the period. (convextrade.com)

• Housing:

  • Official May housing starts at 1,177k represent a sharp downdraft from April (~1,392k); permits around ~1,410k are softer but not collapsing. (tradingeconomics.com)
  • Over a 90-day lens, this reads as rate-sensitive sectors re-weakening, not bottoming.

• Soft demand / sentiment:

  • UMich sentiment moved from depressed mid-50s earlier in spring to deeply depressed readings in late spring, with reports of some June improvement off lows linked to cheaper gasoline. (axios.com)
  • Even with a bounce, the level implies consumers remain defensive—a classic “slowdown” backdrop.

• Equity risk appetite vs macro reality:

  • Your market series (S&P 500, NASDAQ, DJIA) in the history window show strong rallies into April, and today’s readings are “near highs.” This divergence—risk assets strong while goods/soft data weak—often precedes either:
    1. soft landing with earnings resilience, or
    2. late-cycle overvaluation that becomes fragile if labor turns.

Stock Screener Signals

Today’s quant flags skew heavily toward “value dividend” names (ARCC, AIG, BBY, FNF, HMC, T, LTM, BCE) plus oversold growth (CHTR, TLK) with low RSI readings. The macro interpretation: the market is selectively leaning defensive (yield/value), even if headline indices are elevated.

Two important read-throughs:

1. Defensive yield bid + consumer cyclicals on the list = late-cycle barbell.
   Names like AT&T and Ares Capital (BDC) appearing alongside Best Buy suggests investors are mixing income/defensiveness with depressed discretionary cyclicals (potential mean reversion). That is consistent with a macro regime of slowing growth but not a hard downturn—yet.

2. “Oversold growth” flags (CHTR, TLK) point to idiosyncratic stress rather than broad de-risking.
   If recession risk were surging, you’d expect a wider wave of “oversold” across cyclicals and financials. Instead, the screen looks like pockets of valuation compression, not broad liquidation.

One operational note: the yields shown (e.g., 1002%) are not economically plausible as true trailing dividend yields; treat them as data artifacts (special distributions, timing, or feed issues). The signal is still useful—the screen is finding “cheap cash-flow” and “beaten-down growth,” which aligns with an elevated-but-stable risk score.

Latest Economic Developments

• Fed policy: The Fed held the target range at 3.50%–3.75% on June 17, 2026, per the official FOMC statement and implementation note. (federalreserve.gov)
  The macro impact for recession risk: a hold at this level keeps policy restrictive-to-neutral depending on inflation, but it also reduces uncertainty versus a surprise hike/cut. The bigger issue for the next month is whether the Fed signals “higher for longer” (risk to housing/credit) or hints at easing (risk to inflation expectations).

• Labor market (high-frequency): The Labor Department reported initial jobless claims fell to 215,000 for the week ending June 20. (apnews.com)
  This is consistent with your dashboard stance: layoffs are not breaking out. However, a rising 4-week average and rising continued claims (reported elsewhere) keep the “cooling” narrative alive. (fxstreet.com)

• Consumer mood and gas prices: Reporting in late June points to improving sentiment tied to cheaper gas, but from very depressed levels. (axios.com)
  The macro translation: if energy prices remain contained, the soft side can stabilize; if energy rebounds (geopolitics), sentiment likely deteriorates again quickly.

• Leading indicators: The Conference Board reported the LEI up 0.1% in May 2026, following a gain in April, suggesting marginal improvement in leading-growth momentum. (conference-board.org)
  This slightly offsets the gloomier goods/sentiment signals but doesn’t eliminate them.

• Housing: May housing starts fell to ~1.177M SAAR with permits around ~1.41M—a clear negative impulse from a rate-sensitive sector. (tradingeconomics.com)

Near-Term Outlook (Next 30 Days)

Base case: slowdown/soft patch, with recession risk stable-to-slightly higher if labor cooling becomes visible in claims and continued claims.

Key catalysts over the next month:

• Weekly jobless claims (every Thursday):
  The key threshold is your own: 4-week avg staying below ~240k keeps the labor regime “cooling but healthy.” A sustained move above that level would likely push the score higher quickly.

• Next FOMC meeting (scheduled for July 29, 2026 per widely circulated calendars):
  The market will trade the reaction function: do officials emphasize inflation risks (hawkish hold) or growth risks (dovish hold/cut guidance)? (finder.com)

• LEI next release (July 20, 2026):
  After the marginal improvement, a downside surprise would reinforce the “soft patch” narrative. (conference-board.org)

• Housing data cadence:
  With starts already down sharply in May, June/July prints matter: a second leg down would turn housing from “drag” into “accelerating drag.”

Long-Term Outlook (3-6 Months)

The 3–6 month picture remains two-speed:

• Hard data and markets are behaving like the economy is still expanding: industrial production is labeled safe; equities are near highs; HY spreads are tight. This combination typically appears in either:

  1. soft landing phases (growth slows but avoids contraction), or
  2. late-cycle melt-up phases (financial conditions stay easy until a labor/credit event forces repricing).

• Soft demand, goods cycle, and household buffers argue the economy is more fragile than the market implies:

  • Sentiment is extremely low.
  • Freight/goods indicators are weak.
  • Savings rate is very low (thin cushion in your dashboard).
  • Credit card delinquency is elevated (watch).

The key macro hinge over 3–6 months is the sequence:

1. If income and employment stay intact, weak sentiment can mean “grumbling” without recession.
2. If continued claims keep rising and quits remain low (reduced worker confidence), layoffs can follow with a lag—then the Sahm Rule can move quickly from “safe” to “problem.”

A useful historical parallel is the classic “soft data leads, labor lags” pattern. When recession happens, labor almost always confirms; today, it hasn’t. So the long-term outlook is: elevated risk, not a base-case recession—unless labor turns.

What to Watch

Labor (highest priority)

• Initial claims: watch the 4-week average—a sustained move >240k is the practical early warning.
• Continued claims: acceleration matters more than level; rising duration is the “re-employment engine” warning.

Credit stress

• HY OAS: sustained widening beyond ~350–400 bps would be a meaningful regime shift (today ~278 bps is benign). (convextrade.com)
• Consumer delinquencies: any step-up would validate the “thin savings buffer” concern.

Housing

• Starts and permits: look for follow-through weakness after May’s drop (starts ~1.177M). (tradingeconomics.com)

Policy + energy

• Fed communications into July 29: does the Fed lean “inflation vigilance” or “risk management”? (finder.com)
• Energy/geopolitics: sentiment sensitivity to gas prices is high; any renewed spike can transmit into spending and inflation expectations quickly. (axios.com)

Sources

No data available for this window.