Recession Risk 34/100 — November 7, 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 on Oct 8, 2026 to 34 on Nov 7, 2026). The near-term “hard triggers” that typically flip the regime—initial claims and the Sahm Rule—remain decisively benign, keeping the base case anchored in continued expansion. The reason risk is still moderate (not low) is that several forward-looking, labor-adjacent and cyclical signals (notably temporary help, housing, and goods/freight) are deteriorated enough to keep downside convexity elevated if the labor market finally loosens.

Score Trend — Last 30 Days

The score has mean-reverted lower over the 30-day window: Start 38 → End 34 (Δ -4), with a min of 34 and a max of 46 (average 38, 31 samples). That’s a “moderate-risk but stabilizing” profile—risk is not grinding higher; instead, it’s repeatedly failing to sustain spikes.

The shape is best described as spiky volatility around a gentle downtrend. In the last 10 readings, the score touched 34 multiple times (Oct 31, Nov 2, Nov 5, Nov 7), but also printed a 44 on Nov 1, indicating the system is sensitive to a small subset of indicators that can swing quickly (market stress, liquidity, or high-frequency releases). The takeaway: risk is stabilizing, but the system is not “all-clear”—it’s a market/labor “hair-trigger” environment where one or two data points could quickly re-price the next 30 days.

Key Drivers

1. Real-time labor market tripwires are not flashing (big de-risk).

   • Sahm Rule: 0.00 (SAFE)—well below the 0.50 recession trigger.
   • Initial jobless claims: 189K (SAFE) for the week ending Oct 31, 2026, the lowest since mid-July, signaling very limited layoff pressure. (apnews.com)

2. Payrolls and unemployment confirm ongoing expansion (near-term growth intact).

   • October payrolls: +165,000; unemployment rate: 4.1% (little changed). This is inconsistent with an economy rolling into recession in the next ~60–90 days. (bls.gov)

3. Yield curve is positively sloped—no longer the “deep inversion” warning regime.

   • 2s10s ~ +35 bp (watch, but positive), which historically reduces immediate recession odds versus an inversion regime. (helious.io)

4. Housing is weak (classic late-cycle drag), and it’s not improving yet.

   • Building permits: 1,398K (WARNING); housing starts: 1,221K (WARNING/DANGER in category block). Housing tends to lead the cycle, and the current level implies construction momentum remains a risk vector.

5. Labor-adjacent leading signal is deteriorated: Temporary help is in DANGER.

   • Temporary Help Services: 2,526K (DANGER). Temp employment often turns before the broader labor market; this is one of the most important “yellow-to-red” signals still keeping the score in moderate territory.

6. Stress/fragility layer: thin household buffers + elevated uncertainty.

   • Savings rate: 3.8% (WARNING), credit card delinquency: 2.9% (WATCH), and VIX: 28.2 (WATCH) suggest the economy is resilient until jobs crack—then downside can accelerate.

Category Breakdown

• Primary Indicators: 3 safe / 5 watch / 1 danger
  Mixed but not recessionary: the “hard” labor triggers are safe, but the large share of WATCH signals says the system is sensitive to any deterioration in jobs/income.

• Secondary Indicators: 2 safe / 0 watch / 1 danger
  Secondary confirms modest resilience, but the single DANGER flag reinforces that not all cyclicals are participating.

• Housing & Construction: 0 safe / 0 watch / 2 danger
  Housing is a clear recession-risk contributor today—this is the most consistently weak pocket in the dashboard.

• Business Activity: 2 safe / 1 watch / 0 danger
  Activity looks expansionary overall; business conditions are not “breaking,” which aligns with strong payrolls.

• Consumer Credit Stress: 1 safe / 2 watch / 1 danger
  Consumer stress is present but not yet systemic; the risk is that low savings + rising delinquencies becomes nonlinear if unemployment rises.

• Market Signals: 5 safe / 4 watch / 5 danger
  “Two-speed” markets: headline indexes near highs can coexist with internal stress signals (valuations, cyclicals, metals ratios). This category is the main source of volatility in day-to-day score prints.

• Liquidity: 0 safe / 1 watch / 2 danger
  Liquidity is a vulnerability layer—small shocks can propagate faster when buffers are low (and when “safe parking” facilities are depleted).

• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
  High-frequency signals are not uniformly calm—one remains in danger, keeping near-term sensitivity elevated.

Biggest Movers

1. Sahm Rule (0.00): -133.3% (7D) — contradictory / improving
   This is mechanically supportive: the most famous unemployment-based recession trigger is moving away from risk, not toward it.

2. Freight Transportation Index (-0.4): +76.9% (7D) — mixed, but still confirmatory of weakness
   The magnitude looks “better” (less negative), but the level remains DANGER: freight is still signaling a soft goods economy. In recession frameworks, freight weakness is typically confirmatory of late-cycle cooling even when payrolls are still strong.

3. ON RRP Facility ($150M): +48.0% (7D) — confirmatory (liquidity vulnerability)
   Higher usage from near-depleted levels doesn’t “fix” the structural message: liquidity buffers are thin, and that can amplify credit/market stress if volatility returns.

4. Yield Curve (2s10s) (0.35): -12.8% (7D) — slightly confirmatory of caution
   The curve remains positive (good), but the week-over-week flattening suggests markets are not fully embracing a clean re-acceleration narrative.

5. NY Fed Recession Probability (6.6%): -12.2% (7D) — contradictory / improving
   This is a de-risking move in probabilistic terms and broadly consistent with the curve normalization.

90-Day Indicator Trends

What stands out across the past ~90 days is a “split economy” signal: labor hard data remains firm, while forward-looking cyclicals (housing, temp help, freight) are weak enough to keep recession risk above low.

Labor & real-time

• Initial claims: down from 199K (Aug 9) to 206K (Sep 6) in the history window, and now 189K (Oct 31 week) in today’s snapshot—directionally supportive (fewer layoffs). (apnews.com)
• Unemployment rate: essentially flat at 4.1% throughout the history window, and still 4.1% in Oct 2026—stability is the story, not deterioration. (bls.gov)
• Sahm Rule: moved from around -0.03 to -0.07 in early September history, and reads 0.00 today—still nowhere near trigger (no recession confirmation).

Growth/activity

• Industrial production: 102.6 → 103.0 (Aug to early Sep in the history window) and 104.0 today, a mild uptrend consistent with expansion.
• Real personal income ex-transfers: $16.6T through the window; $17.0T today implies continued income growth, but it’s tagged WATCH because the trend matters more than the level.

Housing (late-cycle drag)

• Housing starts: fell from 1,427K (Aug 9) to 1,239K (Aug 19 onward in the history); 1,221K today continues the downward pressure.
• Building permits: bounced from 1,374K (Aug 9) to 1,443K (Aug 19), but 1,398K today suggests the “bounce” did not translate into sustained upside momentum.

Financial conditions & risk appetite

• Credit spreads (HY OAS): improved in the history window (271 → ~265 bps by early Sep) but read 348 bps today—that’s meaningful widening versus 30–90 days ago and is consistent with higher tail risk even alongside strong payrolls.
• VIX: was ~14–16 in Aug/early Sep history but reads 28.2 today, aligning with elevated uncertainty versus the prior 90-day baseline.

“Soft underbelly” indicators

• Temporary help services: ~2,505K most of the window, ticking to ~2,520K by Sep 5–6, but 2,526K today remains classified DANGER—the issue is not a one-week move; it’s the level and regime.
• Freight index: improved from -1.3 to -0.3 in early Sep history; -0.4 today is still contractionary and remains a persistent caution flag.

Stock Screener Signals

Today’s quant flags skew heavily toward “value dividend” and oversold growth, which is a classic late-cycle mixture: investors are simultaneously hunting for cash-flow durability (dividends/defensive carry) while selectively nibbling at beaten-down growth.

The flagged list includes financials/credit-sensitive and rate-sensitive names (ARCC, AIG, FNF, CHTR) alongside consumer cyclicals/telecom (BBY, T) and international exposures (HMC, LTM, TLK, BCE). In macro terms, that combination suggests positioning for slow growth rather than recession, but with an explicit preference for valuation support (low P/E) and income. The “oversold growth” tags (e.g., CHTR RSI 28, TLK RSI 30) imply the market is pricing pockets of stress/mean-reversion opportunities even while headline indexes remain elevated.

One notable caution: the extreme dividend yields shown (triple-digit yields across multiple names) read like data-quality artifacts rather than investable signals. Interpreting the screener as a style indicator (value/income + selective oversold) is still useful, but the yield numbers themselves should not be taken literally for portfolio construction.

Latest Economic Developments

Over the past 48 hours, the macro narrative has been dominated by strong labor prints and very low claims:

• The U.S. jobs report (released Nov 6, 2026) showed nonfarm payrolls +165,000 in October with the unemployment rate at 4.1%. That’s a clear “still-expanding” signal and directly supports keeping recession risk in the moderate (not high) band. (bls.gov)
• Initial jobless claims fell to 189,000 for the week ending Oct 31, 2026, the fewest since mid-July, reinforcing the “low fire” labor market dynamic. (apnews.com)
• Market coverage framed the labor data as firm enough to keep the Fed conversation alive (i.e., growth is not rolling over on its own). (axios.com)
• On Nov 6, 2026, major index performance was steady-to-firm after the jobs data; reports highlighted that Treasury yields held firmer following the strong job market report. (apnews.com)
• The 2s10s curve has been observed around +35 bp at the latest close, consistent with your “re-steepened” framing and supportive versus an inversion regime. (helious.io)

Net: the last 48 hours reduced near-term recession probability, but they did not eliminate the need to watch the leading-edge parts of the cycle (housing, temp help, credit spreads).

Near-Term Outlook (Next 30 Days)

Base case for the next month: slow-but-positive growth with contained recession risk, unless the labor data breaks.

Catalysts and signposts likely to move the score:

• Weekly initial claims: the key threshold remains a sustained move higher; a decisive regime change would look like multiple weeks trending above ~230K (your trigger level). The latest reading (189K) is the opposite of that. (apnews.com)
• Unemployment rate / Sahm Rule drift: the Sahm Rule is 0.00, so the market can tolerate some slippage—but a trend toward 0.50 is the “line in the sand.”
• Credit spreads: with HY OAS around 348 bps, watch for persistence and acceleration (e.g., 380–450 bps) rather than single-week noise; spreads are often the bridge between “soft landing” and “hard landing.”
• Housing releases: starts/permits need to stabilize; further downside risks pushing construction employment and durable goods demand lower into year-end.

Long-Term Outlook (3-6 Months)

The 90-day trend profile implies an economy that is not in recession, but is late-cycle fragile: the labor market is currently strong enough to mask weakness in rate-sensitive and goods-sensitive sectors. That configuration can persist longer than expected—until it doesn’t—because labor is a lagging/slow-moving pillar, while housing/credit can turn faster.

Structurally, the risk over 3–6 months is less about “imminent contraction” and more about asymmetric vulnerability:

• With low household savings (3.8%) and rising delinquency pressure, the consumer looks less insulated than in earlier phases of the cycle.
• With housing already weak, the economy has fewer “shock absorbers” if financial conditions tighten.
• With spreads already elevated (mid-300s bps), the credit channel is closer to a tipping point than it would be in a true low-risk expansion regime.

If the labor market remains in a “strong hire, low fire” mode (as described around the October report), recession risk can stay moderate-to-low into early 2027. (axios.com)
If temp help continues to deteriorate and spreads widen further, recession odds rise meaningfully even without an immediate Sahm/claims trigger—because labor can crack quickly once margins compress and refinancing costs bite.

What to Watch

• Initial claims: sustained trend direction matters more than any single print; watch for a multi-week rise toward/through 230K. (apnews.com)
• Unemployment rate: any move that lifts the Sahm Rule materially off 0.00 and toward the 0.50 trigger.
• Temporary help services: further declines would be an early warning that broader payroll growth is next.
• Housing starts & permits: stabilization versus renewed leg down; housing is currently the most consistent “danger pocket.”
• HY OAS / credit stress: whether 348 bps is the start of a persistent widening cycle.
• Curve shape: keep monitoring whether 2s10s remains durably positive (supportive) or re-flattens sharply (risk-off).

Sources

No data available for this window.