Recession Risk 34/100 — November 12, 2026

Recession Risk Score: 34/100 — MODERATE (-4 vs 30 days ago)

Today’s Recession Risk Score is 34/100 (MODERATE), and it has fallen by 4 points over the past 30 days (from 38 to 34). The near-term recession “tripwires” that matter most—unemployment acceleration (Sahm Rule) and broad labor-market stress—remain clearly inactive, keeping the score out of “elevated” territory. At the same time, the dashboard is not clean: housing is weak, consumer psychology is depressed, and late-cycle valuation/fiscal stress keeps tail risk alive. Net: expansion remains the base case into mid-February 2027, but it’s an expansion with a thinner margin for error.

Score Trend — Last 30 Days

The last 30 days show moderate, choppy mean reversion lower: Start 38 → End 34 (Δ -4), with a 33–46 range and a 38 average across 31 samples. The presence of a high max (46) alongside a low min (33) signals that markets and high-frequency inputs have been volatile enough to periodically “re-price” risk, but the system has repeatedly failed to sustain those higher-risk readings.

The shape matters: the final stretch (last 10 readings) oscillated between 39 and 33, then settled at 34 today. That is consistent with a regime where real economy indicators (jobs/claims/production) remain broadly stable, while risk assets/term structure/credit are doing the short-cycle work of repricing on inflation/Fed communication. In plain terms: recession risk is not accelerating—it’s stabilizing—but it is stabilizing at a level that still warrants active monitoring.

Key Drivers

1. Sahm Rule remains OFF (0.00) despite a higher unemployment rate

   • Unemployment rate: 4.1% (Oct 2026); Sahm Rule: 0.00 (well below the 0.50pp trigger).
   • This is the single most important “real-time recession trigger” in the model—and it’s not close to firing.

2. Yield curve has re-steepened: 2s10s is positive

   • 2s10s: +25 bp (Nov 10, 2026)—a material shift versus an inversion regime.
   • A positive slope tends to reduce near-term recession odds (while acknowledging the caveat: late-cycle bull-steepening can sometimes precede slower growth if driven by front-end cuts rather than growth optimism). (squawkflow.com)

3. Forward-looking growth trackers are not pricing recession

   • Atlanta Fed GDPNow (2026:Q4): 3.5% (updated Nov 9, 2026)—a strong “nowcast” inconsistent with imminent contraction. (atlantafed.org)
   • This is a meaningful offset against the weak pockets elsewhere (housing, sentiment, freight).

4. Manufacturing is expanding (and not just barely)

   • ISM Manufacturing PMI: 55.5 (Oct 2026), up from 54.5 in September—solid expansion. (ismworld.org)
   • This argues against a near-term industrial recession broad enough to drag the whole economy down.

5. Credit conditions are “watchable,” not panicked

   • HY OAS: ~334 bp (Nov 9, 2026)—not crisis-wide, but clearly less forgiving than the tightest-cycle levels. (markets.akyla.ai)
   • In this regime, recession risk rises quickly if spreads widen and labor indicators soften. Today we have only half of that setup.

6. Consumers look psychologically “recessionary” even if the data isn’t

   • UMich sentiment: 48.1 (crisis-level pessimism).
   • Low sentiment plus low savings can become a spending rollover catalyst even when employment is still okay. (data.sca.isr.umich.edu)

Category Breakdown

• Primary Indicators: 3 safe / 5 watch / 1 danger
  Mixed but not deteriorating into a recession pattern: key labor triggers are mostly contained, with one important leading-labor weak spot (temp help) pulling against the broader picture.

• Secondary Indicators: 2 safe / 0 watch / 1 danger
  Secondary signals lean stable, but the lone danger reading is a reminder that “late-cycle fractures” can form without an immediate recession.

• Housing & Construction: 0 safe / 0 watch / 2 danger
  Housing is the cleanest weak block in the entire dashboard—this is the most coherent recession-adjacent signal today.

• Business Activity: 2 safe / 1 watch / 0 danger
  Business activity is not flashing contraction, consistent with PMI/GDPNow firmness.

• Consumer Credit Stress: 1 safe / 2 watch / 1 danger
  Stress is creeping, not spiking—watch the direction of delinquencies and debt service more than the absolute level.

• Market Signals: 6 safe / 3 watch / 5 danger
  This is a “risk-on index level / risk-off under the hood” configuration: equity highs coexist with valuation and macro-sensitive ratio warnings.

• Liquidity: 0 safe / 1 watch / 2 danger
  Liquidity is not providing a cushion; it’s another pathway for tail events (funding stress, sudden tightening) to transmit.

• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
  High-frequency is split: claims remain calm, but other fast-cycle signals (like freight) imply goods-demand fragility.

Biggest Movers

1. ON RRP Facility ($152M): +285.7% (7D) — contradictory / mixed
   Mechanically, this reads as “more usage,” but at such low absolute levels it mostly signals fine-tuning at the margins, not systemic stress.

2. Sahm Rule (0.00): -133.3% (7D) — contradictory (improving)
   Directionally favorable for recession risk, reinforcing that unemployment acceleration is not building.

3. NY Fed Recession Probability (6.4%): -78.8% (7D) — contradictory (improving)
   A sharp drop in a probabilistic model is consistent with easing near-term recession pricing.

4. Freight Transportation Index (-0.4): +76.9% (7D) — confirmatory (worsening risk)
   Freight remains negative and volatile; moves here often lead broader “goods economy” softness.

5. Yield Curve (2s10s) (0.25): -17.5% (7D) — confirmatory (worsening at margin)
   Even though the curve is positive, a week-over-week narrowing is worth watching—especially if it reflects front-end repricing around Fed policy.

90-Day Indicator Trends

Labor market (steady, but with leading-edge soft spots):

• Unemployment rate has been flat at 4.1% throughout the provided 90-day window—no acceleration signature.
• Initial claims improved from ~209K (Aug 14) to ~206K (Sep 12) in the history window, and today’s level is 189K, reinforcing “low-layoff” conditions. (apnews.com)
• Temp help services is the key red flag: ~2505K (Aug 14) → ~2520K (Sep 12) in the history window, while today’s reading is 2526K and flagged DANGER. The point is less the small numeric changes and more the model’s classification: staffing is typically an early employer adjustment lever.

Growth/activity (firming rather than fading):

• Industrial Production rose from ~102.6–103.0 (Aug–Sep) to 104.0 today (SAFE)—an incremental but meaningful improvement in the production base.
• GDPNow in the provided history window sits at 1.8% (Aug–Sep), while the latest web-verified Q4 nowcast is 3.5% as of Nov 9—a notable upward shift in implied momentum since late summer. (atlantafed.org)
• ISM Manufacturing PMI at 55.5 (Oct) reinforces that the manufacturing side is not contracting. (ismworld.org)

Housing (downshifted and staying weak):

• Housing starts dropped from 1427K (Aug 14) to 1239K (Aug 19 onward in the history) and remains weak today (1221K, WARNING). That’s a large step-down that hasn’t reversed.
• Building permits improved briefly (to 1443K), then faded to 1433K in the history window, and sits below trend today at 1398K (WARNING). Housing is behaving like a classic rate-sensitive drag.

Credit/liquidity & financial conditions (watchful, not broken):

• NFCI is stable around -0.55 to -0.56 (easy-to-normal conditions). That’s not a recession setup by itself.
• HY OAS in the history window was ~271 bp (Aug 14) drifting down to ~260 bp (Sep 1), but is ~334 bp (Nov 9) now—a clear widening over ~60–90 days that reduces tolerance for an earnings or growth miss. (markets.akyla.ai)

Valuations & “risk appetite” (frothy in pockets):

• S&P 500 P/E holds at ~22x across the history window and remains elevated today.
• NASDAQ-to-GDP remains in DANGER and fluctuated around ~0.81–0.83 in August; today it is 0.7593 (still DANGER). This is less about timing recession and more about fragility: stretched valuations can amplify shocks.

Stock Screener Signals

Today’s quant flags are dominated by “value dividend” screens: ARCC, AIG, BBY, FNF, HMC, T, LTM, BCE. The common thread is low P/E and “income/defensive carry” posture, which often shows up when the market is comfortable with slower growth and is rewarding cash-flow durability over high-duration narratives.

The oversold growth names—CHTR (RSI 28) and TLK (RSI 30)—suggest pockets of idiosyncratic stress rather than a market-wide de-risking wave (because broad indexes are near highs). In recession-risk terms, that pattern is consistent with a market that’s still “fine” at the index level but is increasingly selective, rotating toward defensives/value while punishing levered or rate-sensitive growth stories.

One important note: the listed dividend yields are clearly data-quality outliers (triple-digit yields are typically the artifact of special dividends, stale prices, or parsing errors). Treat the style signal (value/defensive bias) as real, but don’t treat the raw yield prints as investable numbers.

Latest Economic Developments

Inflation and Fed communication over the last 48 hours have re-entered the driver’s seat. A recent report highlighted that Fed officials are increasingly concerned inflation pressures may be broadening, not fading, and referenced remarks by Governor Michelle Bowman indicating the inflation impulse is spreading beyond a narrow set of categories. (apnews.com) This matters for recession risk because a “sticky inflation / tighter-for-longer” path is one of the clearest ways to turn today’s housing weakness into tomorrow’s broader slowdown.

On policy signaling, Governor Christopher Waller reiterated that activity is strong and the labor market is stable, but that inflation remains too high relative to the 2% goal. (federalreserve.gov) That combination typically keeps the Fed biased toward restraint, even if growth is okay—raising the probability of a policy-driven slowdown if inflation fails to cool.

Meanwhile, the hard data still looks expansionary in the places that matter most for “imminent recession.” GDPNow for 2026:Q4 sits at 3.5% (Nov 9), and the ISM Manufacturing PMI printed 55.5 for October. (atlantafed.org) And on labor-market stress, initial claims at 189K (as reported recently) is consistent with a low-layoff environment. (apnews.com)

Finally, the curve: 2s10s around +25 bp on Nov 10 is not just “less inverted”—it’s outright positively sloped again. (squawkflow.com) That reduces the probability of an imminent recession signal coming from term structure, though it remains worth monitoring why it steepens (growth optimism vs. front-end repricing).

Near-Term Outlook (Next 30 Days)

Base case: continued expansion with rising sensitivity to inflation prints and Fed rhetoric. Over the next month, the risk score will likely be pulled by three competing forces:

• Disinflation progress vs. “broadening price pressures”: if inflation data stays hot, the market will price more tightening risk, pressuring housing/credit-sensitive areas first.
• Labor stability: as long as claims remain sub-200s/low-200s and unemployment doesn’t drift higher, recession probability remains contained.
• Credit spreads: HY OAS in the low-300s is fine—but not forgiving. A move toward 400+ bp alongside weaker labor prints would likely push the score meaningfully higher.

Catalysts that could move the score down: benign inflation surprises, stable-to-better sentiment, continued manufacturing expansion. Catalysts that could move it up: a negative labor inflection (temp help → payrolls → unemployment), a housing break, or a fast credit repricing.

Long-Term Outlook (3-6 Months)

Over a 3–6 month horizon, the macro configuration looks late-cycle but not recessionary. The strongest recession “tell” (unemployment acceleration) is absent, the curve is no longer inverted, and forward growth trackers are positive. Those are meaningful positives for avoiding a near-term contraction.

However, the structural fragilities are not cosmetic:

• Housing is already weak and typically leads broader slowdowns.
• Consumer sentiment is already at recession-like lows; if that begins to show up in spending and delinquency data, the slowdown can become self-reinforcing.
• Credit spreads have widened meaningfully versus late summer, reducing the system’s ability to absorb earnings disappointments.
• Fiscal/interest expense stress is a background amplifier: it doesn’t cause a 90-day recession by itself, but it can constrain policy flexibility if growth cracks.

Net: the 90-day indicator direction of travel suggests no imminent recession, but the 3–6 month risk is best described as conditional—stable if inflation cools, more dangerous if inflation stays sticky and forces tighter policy into already-weak housing.

What to Watch

• Sahm Rule gap: watch for any drift toward 0.50pp (today it’s 0.00).
• Unemployment: any sustained move above 4.1% would matter far more than day-to-day market noise.
• Initial jobless claims: watch for a sustained trend above 230K (today: 189K SAFE).
• 2s10s curve: a return to inversion, or a rapid bull-steepening driven by expected front-end cuts on weakening growth.
• HY OAS: watch for widening from ~334 bp to 400+ bp as the “credit stress threshold.”
• Housing permits/starts: these are already weak—watch for further leg-downs rather than stabilization.
• Consumer stress: savings rate (3.8%) and credit card delinquencies (2.9%)—watch for acceleration, not levels.

Sources

No data available for this window.