Recession Risk 37/100 — June 29, 2026

Recession Risk Score: 37/100 — MODERATE (+3 vs 30 days ago)

Today’s RecessionPulse risk score is 37/100 (MODERATE), up +3 points from 34 thirty days ago (May 30, 2026 → June 29, 2026). The signal set still argues against a 90‑day recession call, primarily because the highest-weight labor trigger (Sahm Rule) remains far from tripwire at 0.10. Financial conditions are broadly supportive—high-yield spreads remain tight and the 2s10s curve is positively sloped—which reduces “policy accident” odds. The deterioration that does matter is concentrated in rate-sensitive housing and a handful of cyclical, real-economy indicators that tend to lead.

Score Trend — Last 30 Days

The last 30 days look less like a steady grind higher and more like a volatile range with a mild upward drift. The score began at 34 (May 30), ended at 37 (June 29), and averaged 37 across 31 samples—so “MODERATE” is the right band, but the story is the distribution: min 34, max 44.

The shape implies fragile stabilization rather than acceleration. Several days printed 44 (notably June 20, 22, and 28), but the score repeatedly mean‑reverted back to the mid‑30s (June 21 and 27 at 34). That pattern typically shows an economy that’s not rolling over broadly, but where pockets of stress (housing, goods demand, sentiment) are intermittently strong enough to tighten the forward risk window.

Key Drivers

Here are the most important drivers keeping today’s reading at 37 (MODERATE) rather than pushing it into the 40s–50s:

1. Labor trigger remains “off” (Sahm Rule = 0.10, SAFE)

   • This is still far below the classic recession trigger threshold and signals no broad-based unemployment break yet.
   • Reinforced by initial jobless claims at 215K for the week ending June 20, 2026, which remains consistent with a resilient labor market. (apnews.com)

2. Financial conditions are supportive (HY OAS ~278 bps; NFCI loose)

   • ICE BofA US High Yield OAS around 278 bps (June 25, 2026) is “risk-on” tight by recession‑risk standards. (convextrade.com)
   • Loose financial conditions reduce near-term credit cascade risk (defaults, forced deleveraging, rapid tightening in lending).

3. Curve is no longer screaming recession (2s10s ≈ +31 bps)

   • The 10Y–2Y spread is +31 bps as of June 26, 2026, which is a meaningful shift away from the classic inversion regime. (yieldcurve.pro)
   • A positive curve doesn’t guarantee safety, but it typically lowers the probability of an imminent recession window.

4. Forward-looking composite is not rolling over (LEI +0.1% m/m in May)

   • The Conference Board LEI rose +0.1% in May 2026 to 99.3, following +0.2% in April—not a “recession-now” configuration. (streetinsider.com)

5. Housing is the clearest macro break (starts 1.177M SAAR, -15.4% m/m)

   • May 2026 housing starts plunged to 1.177M SAAR (-15.4% m/m), the lowest since May 2020, consistent with a rate-sensitive downshift. (haver.com)
   • The magnitude and breadth (including multifamily weakness) make housing the most acute real-economy stress point right now. (ftportfolios.com)

6. “Growth is fine, hiring is cautious” in manufacturing (PMI 54.0; Employment 48.6)

   • ISM Manufacturing PMI = 54.0 (May) signals expansion, but the Employment Index = 48.6 remains in contraction—classic late-cycle caution signal. (ismworld.org)

Category Breakdown

Using today’s category counts:

• Primary Indicators: 3 safe / 4 watch / 2 danger
  Mixed. Labor is holding, but leading labor proxies (like temporary help) and select real-economy signals keep this bucket from clearing.

• Secondary Indicators: 2 safe / 0 watch / 1 danger
  Mostly supportive—this category isn’t confirming a recession regime.

• Housing & Construction: 0 safe / 1 watch / 1 danger
  The housing complex is the most consistent macro deterioration: starts/permitting soft enough to matter for the next-quarter impulse.

• Business Activity: 2 safe / 1 watch / 0 danger
  Still expansion-leaning; manufacturing headline strength offsets employment softness.

• Consumer Credit Stress: 0 safe / 3 watch / 1 danger
  A “yellow flag” zone—delinquencies and debt-service pressure suggest consumer fragility even if it hasn’t become systemic.

• Market Signals: 7 safe / 2 watch / 5 danger
  Internals are conflicted: headline indexes are strong, but valuation/ratio-based and cyclical pricing signals are flashing risk.

• Liquidity: 0 safe / 1 watch / 2 danger
  Liquidity is not “crisis,” but the direction of travel warrants attention because liquidity problems can reprice risk quickly.

• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
  The real-time set is split—claims are fine, but goods-flow proxies (freight) weaken the near-term growth pulse.

Biggest Movers

Top 5 indicators by absolute 7‑day % change (note: some are base-effect sensitive):

1. ON RRP Facility ($6B): +15679.1% (7D)
   Directionally this is contradictory/improving for recession odds if it reflects more cash staying in the private system rather than being parked at the Fed. (But it can also be technical and collateral-driven, so treat it as context, not a primary trigger.)

2. GDP Growth (QoQ annualized) (2.1%): +320.0% (7D)
   Contradictory/improving—a higher growth print reduces near-term recession risk. (The percent change is inflated due to a low prior baseline.)

3. NY Fed Recession Probability (9.4%): +159.7% (7D)
   Confirmatory/worsening in rate-of-change terms, though the level at 9.4% is still low-risk in absolute terms (SAFE).

4. Conference Board LEI (1.7): -117.4% (7D)
   Confirmatory/worsening if sustained. This kind of swing often reflects data update timing; still, it’s directionally consistent with “growth slowing, not collapsing.”

5. Yield Curve (2s30s) (0.77): -82.1% (7D)
   Confirmatory/worsening if it reflects long-end growth/inflation skepticism. However, your broader curve framing (2s10s positive) still argues against imminent recession.

90-Day Indicator Trends

Your 90‑day history window shows a key theme: macro risk isn’t broadening uniformly—it’s rotating between (1) cyclical real economy and (2) market/valuation stress, while labor and credit remain the stabilizers.

Labor & labor-leading

• Sahm Rule: 0.27 (Mar 31) → 0.20 (early April) → 0.10 (today)
  That’s an improvement in the highest-weight trigger: risk down over the last ~90 days, consistent with “no recession in the next 90 days” base case.
• Initial claims: early April ranged roughly 202K–219K; most recent cited week is 215K (June 20), i.e., still historically low and not trending into warning territory. (apnews.com)
• JOLTS quits rate: 2.0% (Mar 31) → 1.9% (April onward) (WARNING)
  This is a persistent “softness” signal: workers feel less confident, which tends to precede slower wage growth and consumption—but it’s not a recession trigger by itself.

Credit & financial conditions

• HY OAS: early window shows ~320 bps (Mar 31) down into ~290s (mid‑April) and now ~278 bps (Jun 25)—a clear tightening/benign trend that usually contradicts imminent recession. (convextrade.com)
• Chicago Fed NFCI: around -0.48 to -0.43 in the early period—still “loose” by interpretation and not a stress regime.

Growth & activity

• GDPNow: pinned at ~1.8% across the window (steady, below-trend expansion).
• ISM Manufacturing: the May print at 54.0 is consistent with expansion momentum, but employment at 48.6 confirms “output okay, hiring cautious.” (ismworld.org)

Housing (the standout deterioration)

• Housing starts: April in your history shows ~1.487M, versus May at 1.177M (reported mid‑June), a steep downshift that is large enough to drag on construction employment, durable goods demand, and local income growth if it persists. (haver.com)
• Permits: May permits around ~1.413M (0.7% m/m decline per breakdown sources), which is less dramatic than starts but still not signaling a rebound. (ftportfolios.com)

Markets & valuations (risk not about “recession,” but about “fragility”)

• Equities: S&P 500 and Nasdaq in your history show a strong run-up (risk-on), while valuation ratios remain elevated (WATCH/DANGER in your dashboard). This mix can keep recession risk moderate (because markets are not pricing in contraction) while increasing shock sensitivity if growth disappoints.

Stock Screener Signals

Today’s quant flags are dominated by value + dividend profiles (ARCC, AIG, BBY, FNF, HMC, T, LTM, BCE) with a smaller pocket of oversold growth (CHTR, TLK). That composition is informative: it suggests the market is not positioned for an immediate earnings collapse, but is selectively leaning toward cash flow, payout, and “cheap multiples.”

Two interpretations matter for recession risk:

1. Defensive carry without panic:
   A value/dividend tilt often shows investors want income + margin of safety, but the presence of RSIs in the 40–50s for many names implies rotation, not capitulation. That aligns with a moderate recession-risk score rather than high.

2. Consumer and rate-sensitive cross-currents:
   Names like Best Buy (BBY) showing low RSI (39) hints at consumer durables sensitivity—consistent with low savings-rate stress and housing slowdown. Meanwhile, Charter (CHTR) as “oversold growth” (RSI 28) is a reminder that levered/competitive sectors can reprice quickly if financing costs or churn worsen—more of a credit/earnings-cycle watch item than a recession trigger today.

One red flag: the quoted yields in your screener (e.g., 1002% for ARCC) are mechanically implausible and likely reflect a data/format issue. Treat the style factors (value, dividend, oversold) as the usable signal, not the raw yield numbers.

Latest Economic Developments

The last several days reinforced the “slow growth, not recession” baseline:

• Jobless claims remain low: Initial claims fell to 215,000 for the week ending June 20, 2026, underscoring that layoffs are not accelerating. (apnews.com)
• LEI is not collapsing: The Conference Board’s LEI rose +0.1% in May to 99.3, following +0.2% in April, which is inconsistent with a near-term recession signal cluster. (streetinsider.com)
• Manufacturing headline strength with hiring caution: ISM Manufacturing at 54.0 (May) indicates expansion; employment at 48.6 remains contractionary, consistent with firms managing labor tightly even while output holds. (ismworld.org)
• Housing shock is real and recent: May housing starts at 1.177M SAAR (-15.4% m/m) is the clearest growth-negative surprise in the recent data flow, and the most plausible channel for spillovers over the next 1–2 quarters if sustained. (haver.com)
• Credit spreads stay calm: HY OAS around 278 bps (June 25) continues to argue that markets are not pricing a near-term default cycle. (convextrade.com)
• Curve configuration reduces “imminent” risk: 2s10s at +31 bps (June 26) reduces the probability of an imminent contraction signal from the curve complex. (yieldcurve.pro)

Net: the data mix supports the MODERATE label—real-economy cyclicals are weakening, but labor and credit are not confirming a recession call.

Near-Term Outlook (Next 30 Days)

Base case for the next month: risk score stays in the mid-to-high 30s, with episodic spikes into the low 40s if housing and cyclicals worsen or if markets reprice.

What can move the score meaningfully by late July 2026:

• Labor inflection (most important):

  • Watch whether initial claims break above the low‑200Ks into a sustained uptrend (and whether continuing claims rise persistently).
  • Any sustained move that begins to pull the Sahm Rule upward would be the fastest path to pushing the score into the 40s–50s.

• Housing follow-through:

  • Starts collapsed in May; the question is whether permits and starts stabilize or cascade. A second weak print would increase confidence that housing is no longer “a pocket,” but a broader growth drag.

• Credit spreads & funding tone:

  • HY OAS is tight; a widening impulse from ~278 bps toward the low‑300s would be an early warning that markets are transitioning from “soft landing” to “stress.”

• Manufacturing employment and small-business mood:

  • PMI says expansion, employment says caution. If employment stays sub‑50 while new orders roll, recession odds rise even if the headline index lags.

Long-Term Outlook (3-6 Months)

Over a 3–6 month horizon, recession risk is best described as contained but increasingly path-dependent:

• If labor stays intact: the economy can absorb housing softness through services strength, nominal income growth, and still-benign credit. In that world, risk likely mean‑reverts toward the low-to-mid 30s.
• If housing weakness spreads into jobs: construction, building products, furniture/appliances, and local services could weaken enough to pressure payroll growth and raise unemployment—at which point the Sahm Rule can move quickly.
• Structural fragility remains high: valuation extremes and fiscal/interest expense pressures (in your dashboard) don’t cause recessions on a schedule, but they reduce shock absorbers. The next recession—whenever it arrives—would likely be driven by a trigger (energy spike, geopolitical disruption, credit event) interacting with lower buffers (low savings, higher debt service, rate-sensitive sectors).

Historical parallel logic: late-cycle periods often show exactly this mix—headline activity okay, hiring cautious, housing weak—until a catalyst turns “slow growth” into “contraction.” The next 90 days are still more consistent with slow growth + pockets of stress than outright recession, but the tail risk is non-trivial because housing has already delivered a material negative shock.

What to Watch

Concrete watchlist and thresholds that would move the score:

• Sahm Rule: any sustained move upward from 0.10 toward the trigger zone (watch the next unemployment prints).
• Initial claims: a sustained break above roughly the mid‑200Ks and trending higher week-over-week.
• HY OAS: widening from ~278 bps into the >325 bps zone would be a meaningful early stress confirmation. (convextrade.com)
• Housing: whether starts/permits stabilize after the May collapse to 1.177M SAAR or continue falling. (haver.com)
• Manufacturing employment: continued sub‑50 prints (currently 48.6) alongside any softening in new orders. (ismworld.org)
• Curve: if the curve re-flattens materially after turning positive (2s10s +31 bps as of June 26). (yieldcurve.pro)

Sources

No data available for this window.