Recession Risk 34/100 — November 8, 2026

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

Today’s Recession Risk Score is 34/100 (MODERATE), down 4 points vs October 9, 2026 (38 → 34). The verdict: near-term recession risk is contained by a still-resilient labor market and a now-positively sloped yield curve, both of which tend to suppress “imminent downturn” probabilities. The counterweight is a two-track economy: market and headline activity data look fine, but household stress (sentiment, savings cushion) and early credit repricing keep tail risks alive.

Score Trend — Last 30 Days

The last 30 days were choppy but net-improving: Start 38 → End 34 (Δ -4), with a minimum of 34 and a maximum of 46 across 31 readings. The average reading of 38 tells you the “typical” day this month felt more risk-on than where we ended—meaning the late-period drift has been toward moderation, not escalation.

The shape matters. This wasn’t a smooth grind lower; it was mean-reversion with episodic spikes (notably the 44 print on 2026-11-01, shortly after the 34 on 2026-10-31). The last 10 readings show a tight range around the mid-30s, suggesting recession risk is stabilizing—but still sensitive to single shocks (policy/inflation surprises, credit spread gaps, consumer retrenchment).

Key Drivers

1. Labor market: strong “low fire” dynamics keep recession probability capped

   • Nonfarm payrolls +165k in October 2026 and unemployment 4.1% keep the core recession playbook (job losses → income hit → spending pullback) from igniting. (bls.gov)
   • Initial claims 189k (fewest since mid-July) reinforces that layoffs remain scarce. (apnews.com)
   • With the Sahm Rule at 0.00, there’s no labor-market-triggered recession signal today.

2. Yield curve: the “classic warning light” has switched off

   • The 2s10s spread is positive (~+35 bp on Nov 6, 2026), implying markets are no longer pricing the same near-term policy mistake/growth shock regime embedded in inversion periods. (theovernightrate.com)
   • In practical scoring terms: curve normalization doesn’t guarantee expansion, but it removes one of the strongest historical recession priors.

3. Manufacturing: expansionary momentum offsets goods-side weakness elsewhere

   • ISM Manufacturing PMI 55.5 (October 2026) signals broad factory expansion, consistent with a still-growing real economy. (ismworld.org)
   • This matters because when recessions are near, manufacturing surveys tend to sag toward contraction. Today they’re doing the opposite.

4. Consumers: sentiment is signaling “late-cycle fragility”

   • University of Michigan consumer sentiment: 48.1—extremely depressed by historical standards—points to continued vulnerability in discretionary demand. (sca.isr.umich.edu)
   • When sentiment is this weak, the risk isn’t that spending collapses instantly; it’s that any shock (gas/food, credit tightening, job insecurity) transmits faster into pullbacks.

5. Credit: early repricing is underway (not panic—yet)

   • High-yield OAS ~3.48% (348 bps) on Nov 5, 2026, up from ~3.05% a year earlier, indicates rising marginal stress and higher default-risk compensation. (equibles.com)
   • At 348 bps, spreads are not recession-level, but the direction of travel is what prevents the score from falling into “LOW.”

6. Policy path risk: the Fed is paused, but inflation uncertainty keeps the distribution fat-tailed

   • The Fed held the target range at 3.75%–4.00% on Oct 28, 2026, reducing immediate tightening pressure—but leaving markets highly data-dependent into December. (federalreserve.gov)

Category Breakdown

Using the provided signal counts:

• Primary Indicators: 3 safe / 5 watch / 1 danger
  Mixed but not recessionary: labor is mostly constructive, while “watch” readings keep the system sensitive to deterioration.

• Secondary Indicators: 2 safe / 0 watch / 1 danger
  Secondary confirms “growth is still there,” but the lone danger reading is a reminder that lagging/structural risks haven’t vanished.

• Housing & Construction: 0 safe / 0 watch / 2 danger
  Housing is the clearest macro soft spot; permits/starts weakness is consistent with higher-rate drag still working through the pipeline.

• Business Activity: 2 safe / 1 watch / 0 danger
  Business-side indicators are steady—more consistent with slowdown risk than imminent contraction.

• Consumer Credit Stress: 1 safe / 2 watch / 1 danger
  Household balance sheets are tightening at the margin: delinquency and debt service trends are “watch,” and savings cushion is thin.

• Market Signals: 5 safe / 4 watch / 5 danger
  This is the oddest mix: indexes near highs while several macro-market internals (risk ratios, metals signals, volatility) flash caution.

• Liquidity: 0 safe / 1 watch / 2 danger
  Liquidity is not “broken,” but it is less forgiving—making the system more jumpy when volatility rises.

• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
  Fast data is split: labor high-frequency looks fine, while freight/goods movement remains soft.

Biggest Movers

Top 5 by absolute 7-day % change (as provided), with interpretation:

1. Sahm Rule (0.00): -133.3% (7D)
   Contradictory (improving risk): reinforces that the labor market is not transitioning into a recession trigger regime.

2. NY Fed Recession Probability (6.6%): -78.8% (7D)
   Contradictory (improving risk): this is a big easing move in a widely watched market-implied recession measure, consistent with curve normalization.

3. Freight Transportation Index (-0.4): +76.9% (7D)
   Confirmatory (worsening risk): even if the index is “less negative” than before, it remains DANGER and flags softness in goods demand/logistics.

4. ON RRP Facility ($150M): +48.0% (7D)
   Confirmatory (worsening risk): volatile, but directionally consistent with a liquidity backdrop that’s less buffered than earlier in the cycle.

5. Yield Curve (2s30s) (0.79): -8.1% (7D)
   Confirmatory (slightly worsening): long-end steepness has faded a touch; not a recession signal by itself, but it reduces the “all-clear” from curve structure.

90-Day Indicator Trends

Below is what the last ~90 days of provided history imply about trend and regime shifts (comparing current readings to ~30/60/90 days ago where the data allows):

• Income (Real Personal Income ex transfers): $16.6T → $17.0T
  The history block shows $16.6T in August/early September, while today’s dashboard is $17.0T (WATCH). That’s a meaningful improvement in level, but still labeled watch—suggesting the model is focusing on rate of change and/or inflation-adjusted momentum rather than the headline level alone.

• Initial claims: 199k–209k (Aug) → 206k (early Sep) → 189k (today)
  Claims have drifted down versus the late-summer plateau. That is a classic “no recession imminent” signature, and consistent with the AP report highlighting historically low layoffs. (apnews.com)

• Industrial production: ~102.6 (Aug) → ~103.0 (Sep) → 104.0 (today)
  The index is rising gradually, reinforcing that hard activity data is not rolling over.

• Yield curve (2s10s): ~0.50 in mid-Aug → ~0.41 in early Sep → 0.35 today (Nov 6 reference)
  The curve is still positive but has flattened modestly relative to late summer. Even so, remaining above zero continues to reduce near-term recession odds versus an inversion regime. (theovernightrate.com)

• Consumer sentiment: ~49.5 (Aug) → ~55.2 (late Aug/early Sep) → 48.1 (today)
  Sentiment has re-deteriorated sharply back to crisis-like pessimism. That’s a key reason the risk score remains MODERATE rather than falling toward LOW. (sca.isr.umich.edu)

• Housing starts: ~1427k (Aug) → ~1239k (late Aug/early Sep) → 1221k (today)
  Directionally, housing has stepped down and stayed weak—a common late-cycle drag channel.

• Credit spreads (from history block for “credit-spreads” and today’s “HY OAS”)

  • The history for “credit-spreads” shows ~260–275 bps in late Aug/early Sep, while today’s HY OAS is 348 bps. That’s a clear widening over roughly two months—an important inflection even if absolute levels are not distressed.

• Market volatility (VIX): ~14–16 (Aug/early Sep) → 28.2 today
  Volatility has repriced materially higher, consistent with the risk-sensitive market tape described in recent market recaps (post-election/AI-led turbulence). (kiplinger.com)

Net: over the last 90 days, hard activity and labor improved, but household sentiment, housing, credit, and volatility worsened. That’s the textbook profile of a score that can fall modestly (because jobs hold) while refusing to collapse into “all clear” (because transmission channels are getting more fragile).

Stock Screener Signals

Today’s quant flags are dominated by “value dividend” profiles: ARCC, AIG, BBY, FNF, HMC, T, LTM, BCE—with a smaller sleeve of oversold growth (CHTR, TLK) based on low RSI readings.

Two takeaways:

1. Market positioning is leaning defensive-carry rather than high-beta expansion.
   A basket heavy in dividend/value typically performs when investors want cash flow, balance-sheet resilience, and valuation support—a common posture in late-cycle or uncertainty spikes. That fits the macro mosaic: jobs solid, but sentiment weak and volatility elevated.

2. Oversold growth flags suggest selective mean-reversion, not broad risk-on.
   CHTR (RSI 28) and TLK (RSI 30) point to pockets of capitulation/oversold conditions—more consistent with idiosyncratic selloffs and factor rotation than with a broad-based macro downturn being priced.

Note: several listed yields look mechanically extreme (e.g., ARCC “1002%”), which often reflects data/format artifacts rather than investable yield levels—so treat the screener’s factor classification (value/dividend vs oversold growth) as the cleaner signal than the raw yield figures.

Latest Economic Developments

• Jobs: October payrolls came in strong at +165,000, with unemployment 4.1%—a clear “resilient labor” print that reduces near-term recession risk. (bls.gov)
• Claims: Weekly initial jobless claims fell to 189,000, the lowest since mid-July, underscoring the “low fire” labor market regime. (apnews.com)
• Manufacturing: ISM’s October manufacturing PMI rose to 55.5, its 10th consecutive month of expansion per Axios coverage—supportive for near-term growth momentum. (ismworld.org)
• Leading indicators: The Conference Board reported the LEI was flat in September 2026, consistent with slowing risk but not an imminent contraction impulse. (conference-board.org)
• Fed: The FOMC held rates at 3.75%–4.00% (Oct 28, 2026), keeping policy from tightening immediately while preserving optionality into the December meeting. (federalreserve.gov)
• Markets: Risk assets had a volatile week tied to election outcomes and AI/data-center narratives; the S&P 500 ended the week lower even after a rebound session, while volatility spiked earlier in the week. (kiplinger.com)

Near-Term Outlook (Next 30 Days)

Base case for the next month: moderate risk, range-bound score (low-30s to high-30s) unless one of two things breaks—labor or credit.

What can move the score quickly:

• Inflation prints → December Fed pricing: With the Fed paused but data-dependent, any upside inflation surprise can revive hike odds and tighten financial conditions via the front end of the curve.
• Claims trend: If initial claims stop falling and begin a sustained climb (several weeks), “WATCH” labor indicators can flip quickly into higher-risk territory.
• Credit spread drift: HY OAS moving from the mid-300s toward 450–500 bps would be a clear regime shift into broad risk repricing.
• Housing follow-through: With starts/permits already weak, another leg down would deepen the growth drag that’s currently “contained” by jobs.

Calendar-wise, keep an eye on:

• CPI release schedule (BLS calendar) and other major inflation updates. (bls.gov)
• JOLTS for October 2026 (scheduled Dec 1, 2026 at 10:00 AM ET per BLS). (bls.gov)

Long-Term Outlook (3-6 Months)

Over 3–6 months, the economy looks less like “recession imminent” and more like late-cycle fragility with asymmetric downside:

• The labor market’s current strength (payrolls, claims, Sahm) is the main reason recession risk is not elevated today. If this holds, the economy can keep growing even with soft housing and weak sentiment.
• But the household buffer is thin (low savings rate in your dashboard, rising debt service and delinquencies), and credit is beginning to reprice—the classic ingredients for a downturn if labor cracks.
• The yield curve normalization reduces the historical recession prior, but it doesn’t immunize the economy; the curve can stay positive while growth slows if term premium/inflation compensation rises.

Historical parallel framework (high-level): many slowdowns begin with housing + sentiment + spreads weakening first, while payrolls hold—until a catalyst (policy, energy, external shock, or profit squeeze) pushes layoffs up. Your current dashboard looks like that early phase: warning lights are visible, but not yet synchronized.

What to Watch

Key thresholds and events that would move the score:

• Sahm Rule: watch for movement from 0.00 toward 0.50 (the cleanest short-horizon recession tripwire in many cycles).
• Initial jobless claims: a sustained move above ~230k (and rising) would suggest the “low fire” regime is ending.
• HY OAS: a decisive break above ~450–500 bps would signal a broad funding/credit regime shift.
• Consumer sentiment: staying pinned near ~48 raises vulnerability; any further deterioration alongside weaker retail spending would be a red flag.
• Housing: permits/starts stabilizing would reduce downside risk; further declines would keep growth pressure on.
• Policy: any material shift in December meeting expectations (hawkish surprise) could tighten conditions quickly.

Sources

No data available for this window.