Recession Risk 38/100 — November 6, 2026

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

Today’s Recession Risk Score is 38/100, keeping the outlook in the MODERATE band and unchanged versus 30 days ago (start 38 → end 38). The macro picture still reads as a slowdown, not a downturn: layoffs remain scarce, the yield curve is positive, and manufacturing is expanding. But a growing cluster of leading/behavioral warnings—especially temporary help weakness, depressed sentiment, soft housing flow, and slightly wider credit—keeps the score from drifting into “low risk.”

Score Trend — Last 30 Days

Over the last 30 days (2026-10-07 → 2026-11-06), the score started at 38 and ends at 38, with a range of 34 to 46 and a 30-day average of 38. That’s a classic “mean-reverting” pattern: a stable baseline punctuated by short-lived risk flare-ups that fail to persist.

The last 10 readings underline the point: 34 (Oct 31) → 44 (Nov 1) → 34 (Nov 2) → 38 (Nov 3) → 36 (Nov 4) → 34 (Nov 5) → 38 (Nov 6). Those swings suggest the system is currently sensitive to market/liquidity and soft data noise, but the hard labor and production backbone is still preventing a sustained break higher in recession risk.

Key Drivers

Here are the highest-conviction forces shaping today’s 38/100 reading:

1. Layoffs remain inconsistent with recession onset

   • Initial jobless claims: 189k (week ending Oct 31, 2026)—the lowest since mid-July per the Labor Department. (dol.gov)
   • This is the single cleanest near-real-time evidence that the economy is not in a broad-based labor contraction.

2. Manufacturing is expanding, with production running hot

   • ISM Manufacturing PMI: 55.5 (Oct 2026), and Production Index: 59.0 (highest since Nov 2021). (ismworld.org)
   • That combination is not typical of an economy within 90 days of recession unless the labor market breaks abruptly.

3. Yield curve no longer screams “policy mistake”

   • 2s10s: +32 bps (positively sloped). A positive curve reduces the odds that tight policy is imminently choking off credit creation.
   • The caveat: the curve can steepen for “bad reasons” later (front-end cuts in response to deterioration). For now, the steepening is a risk reducer, not a warning flare.

4. Leading labor indicator flashing: Temporary Help Services in DANGER

   • Temp help: 2,487k (DANGER) today—your system flags this as a sharp decline and a classic early-cycle crack.
   • In most pre-recession playbooks, temp help is among the first labor series to roll over meaningfully.

5. Consumer psychology is recessionary even if spending hasn’t cracked

   • UMich sentiment: 48.1 (DANGER) — “crisis-level pessimism” in your taxonomy.
   • When sentiment is this weak and the savings buffer is thin, consumption becomes more fragile to shocks (gas prices, layoffs, credit tightening).

6. Credit and liquidity are no longer tailwinds

   • HY OAS: ~340 bps (WATCH)—not alarming, but no longer “tight.” Public market credit is beginning to price higher marginal risk. (Recent daily readings show low-to-mid 3%s.) (ycharts.com)
   • ON RRP: $125M (WARNING)—essentially depleted, meaning one prior system liquidity absorber is no longer meaningfully in play (a “plumbing” watchpoint).

Category Breakdown

(Using your provided signal counts.)

• Primary Indicators: 3 safe / 5 watch / 1 danger
  Primary signals are mixed: the “hard” backbone is mostly fine, but the watch cluster indicates late-cycle drift rather than fresh acceleration.

• Secondary Indicators: 2 safe / 0 watch / 1 danger
  Secondary indicators are mostly stable, but the single danger reading matters because these tend to lead when the cycle turns.

• Housing & Construction: 0 safe / 0 watch / 2 danger
  Housing is the cleanest soft spot in the dashboard. With starts/permits below trend, residential construction remains a growth headwind and a classic channel for slowdowns.

• Business Activity: 2 safe / 1 watch / 0 danger
  Business activity looks resilient overall—consistent with ISM expansion and solid profits—yet not uniformly improving.

• Consumer Credit Stress: 1 safe / 2 watch / 1 danger
  The credit picture is “tight but not broken.” Delinquencies and debt service are drifting the wrong way, raising the risk that a labor wobble becomes a demand shock.

• Market Signals: 6 safe / 3 watch / 5 danger
  Markets are sending two different messages: indexes near highs and low VIX (benign), but multiple valuation and cross-asset fear gauges (e.g., copper/gold) suggest macro unease under the surface.

• Liquidity: 0 safe / 1 watch / 2 danger
  Liquidity is not flashing crisis, but the direction of travel implies less cushion if volatility returns.

• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
  High-frequency signals look like a patchwork—good claims data vs weaker goods-flow proxies—consistent with a late-cycle “rotation” rather than a synchronized contraction.

Biggest Movers

Top 5 by absolute 7-day % change (from your block), with interpretation:

1. NY Fed Recession Probability (6.3%): +344.4% (7D)

   • Confirmatory (worsening risk) mechanically, but interpret cautiously: percentage moves are huge because the base is small. Still, it reflects a meaningful jump in model-implied risk.

2. Sahm Rule (0.00): -133.3% (7D)

   • Contradictory (improving risk) and important: a non-triggered Sahm reading argues against a near-term recession call. (Also note the math artifact: moving from a small negative/positive can create odd % changes.)

3. Freight Transportation Index (-0.4): +76.9% (7D)

   • Contradictory (improving) because the index is less negative than before—i.e., still weak, but potentially stabilizing.

4. ON RRP Facility ($125M): +48.0% (7D)

   • Neutral-to-confirmatory (worsening cushion). Even a 48% “increase” from a near-zero level doesn’t restore the prior liquidity buffer; it mainly highlights that RRP is functionally depleted.

5. Yield Curve (2s10s) (0.32): -12.8% (7D)

   • Mildly confirmatory (worsening) in the sense that the curve is less positive than a week ago. But it remains positive, which still argues against imminent recession.

90-Day Indicator Trends

No data available for this window.

(Your “90-DAY INDICATOR HISTORY” block provided here is largely a partial slice clustered around early Aug to early Sep 2026 for many series, rather than a full 90-day run into Nov 6, 2026. I’m treating it as incomplete for strict 90-day comparisons.)

That said, using the available historical snapshots to identify direction of travel:

• Industrial production rose from roughly 102.6 (Aug 8) to ~103.0 (late Aug/early Sep) in the history block, and is 104.0 today (SAFE). That’s a clear uptrend in output, consistent with expanding manufacturing.
• Yield curve (2s10s) in the history block drifted down from ~0.46–0.53 in mid-Aug toward ~0.40–0.43 by early Sep, and sits at 0.32 today (WATCH)—still positive, but less steep than late summer, implying slightly less “easy carry” for banks/credit creation.
• Housing starts show a sharp step-down in the history: 1427k (Aug 8) to 1239k (Aug 19 onward); today is 1221k (WARNING), implying housing remains stuck below trend, not rebounding.
• Credit spreads (HY OAS) were about 271 bps (Aug 8), ~260–266 bps (early Sep) in the history block, and are ~340 bps today (WATCH)—a material widening over the broader period, consistent with tighter financial conditions at the margin.
• Consumer sentiment improved in the history from 49.5 (Aug) to 55.2 (late Aug/early Sep), yet is 48.1 today (DANGER)—a reversal lower, matching your “soft/behavioral cracks” narrative.

Bottom line on trends: the “hard production” side is firming, but housing + sentiment + credit are tracking as the dominant late-cycle drags. That combination usually produces slower growth first; recession risk rises meaningfully only if labor follows.

Stock Screener Signals

Today’s quant flags skew heavily toward value/dividend and a smaller set of oversold growth. In macro terms, that mix often shows up when the market is simultaneously:

• looking for cash-flow durability (dividend/value screens), and
• selectively hunting mean reversion in beaten-down secular names (oversold growth).

Value/dividend cluster ($ARCC, $AIG, $BBY, $FNF, $HMC, $T, $LTM, $BCE) points to a market preference for:

• current income and lower-multiple exposure (consistent with “growth slows, but no crash”),
• businesses that may benefit from stable-to-falling long rates if the curve remains positive,
• and (implicitly) some skepticism about paying peak multiples across the board given your dashboard’s valuation warnings (e.g., NASDAQ/GDP danger).

The oversold growth names flagged ($CHTR, $TLK) with low RSI readings suggest risk appetite hasn’t vanished—investors are still shopping in higher beta pockets, but doing it selectively. In a recession-risk context, that’s consistent with a moderate score: markets are not positioned for imminent contraction, but they are rotating toward cheaper cash flows.

Latest Economic Developments

• Initial claims fell to 189,000 for the week ending Oct 31, 2026, the lowest since mid-July, reinforcing that layoffs are still scarce. (dol.gov)
• Q3 productivity surged: nonfarm labor productivity rose 3.6% annualized in Q3, while unit labor costs fell 0.7% annualized. That’s a meaningful “soft landing” style impulse—better supply-side performance reduces the need for aggressive restraint. (investing.com)
• Manufacturing momentum improved in October: ISM Manufacturing PMI rose to 55.5, and the Production Index jumped to 59.0 (highest since Nov 2021). (ismworld.org)
• Mortgage rates eased modestly: the average 30-year fixed rate fell to 7.18%, its third straight decline (per AP’s reporting of Freddie Mac’s weekly survey). That’s directionally helpful for housing, though rates remain high versus last year. (apnews.com)
• Into Friday Nov 6, 2026, forecasters expected the October jobs report to show roughly ~65k jobs added and ~4.2% unemployment, implying continued cooling but not collapse. (apnews.com)

Net impact on recession odds: the claims + productivity + ISM trio is pro-expansion, and it explains why today’s score didn’t drift higher even with ugly sentiment and soft housing.

Near-Term Outlook (Next 30 Days)

The next month is about whether labor “catches down” to the soft data—or whether soft data is simply reflecting inflation fatigue and high rates while the real economy keeps grinding.

Key near-term catalysts:

• Payrolls (Oct data) released today, Nov 6, 2026, and the next print on Dec 4, 2026 (Nov data). A move in unemployment toward ~4.5% and/or a clear hiring downshift would be the fastest pathway toward a Sahm-style escalation.
• Credit spreads and funding conditions: with HY OAS around the mid-3%s, sustained widening toward ~450–500 bps would be a regime change consistent with recession-risk repricing.
• Housing high-frequency: with mortgage rates easing to ~7.18%, the question is whether starts/permits stabilize or continue to sag. (apnews.com)

Base case for the score: range-bound (mid-30s to low-40s) unless labor cracks or spreads gap wider.

Long-Term Outlook (3-6 Months)

Over the next 3–6 months, the macro setup looks like “late-cycle expansion with rising fragility” rather than a clean re-acceleration.

• What supports expansion: strong manufacturing readings (PMI 55.5, production 59.0) and improving productivity (3.6% annualized in Q3) imply the supply side is not breaking; that typically lowers recession probability unless demand collapses. (ismworld.org)
• What raises fragility: the dashboard’s combination of temporary help deterioration, low savings, and elevated delinquencies/debt service suggests the consumer is more shock-sensitive than headline GDP would imply. If job growth slows further while credit costs remain high, consumption can turn quickly.
• Market regime risk: elevated valuation warnings plus “fear” commodity ratios (copper/gold danger) hint that markets may be discounting a future slowdown even as index levels remain high. That can coexist for a while—until labor or credit forces a repricing.

My 3–6 month takeaway: recession isn’t the base case, but the distribution is fatter-tailed than the “hard data” alone suggests. The next sustained move in the score likely comes from unemployment drift + HY widening (not from one-off sentiment prints).

What to Watch

Concrete triggers and thresholds that would move the needle:

• Initial claims: watch for a sustained break above ~230k–250k (trend, not a single week). Claims at 189k today is the opposite signal. (dol.gov)
• Unemployment rate: a move from 4.2% toward ~4.5%+ with weakening hiring would raise odds of a Sahm-style dynamic.
• High yield spreads: a sustained widening toward ~450–500 bps would be a clear “risk-off” confirmation that financing is tightening materially.
• Housing stabilization: permits/stats need to stop bleeding; watch for a turn that aligns with easing mortgage rates (7.18% latest weekly read). (apnews.com)
• Manufacturing follow-through: PMI can be noisy—watch whether new orders/production remain >50 and whether employment stops moderating. (ismworld.org)
• Productivity vs wages: continued strong productivity with contained unit labor costs supports disinflation without recession (the “good path”). (investing.com)

Sources

No data available for this window.