Recession Risk 38/100 — September 24, 2026

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

Today’s Recession Risk Score is 38/100 (MODERATE), and it has held steady versus 30 days ago (38 → 38). The top-line message remains: no imminent recession signal from the labor-market “tripwires” (Sahm Rule is still safely untriggered), while growth trackers remain positive. The risk stays “moderate” because late-cycle fragilities are accumulating—most notably temporary help/freight weakness and thin household buffers—at the same time the Fed has tightened at the margin with the September 16, 2026 hike. (federalreserve.gov)

Score Trend — Last 30 Days

Over the last 30 days (2026-08-25 → 2026-09-24), the score has been range-bound: Start 38, End 38 (Δ 0), with a min of 34, max of 39, and avg of 36. The band tells you the system is seeing intermittent flare-ups (brief pushes toward the high-30s) but no sustained escalation into a higher-risk regime.

The shape of the last 10 readings is especially revealing: a stable low plateau (34) through Sep 15–17, followed by step-ups (Sep 18 and Sep 22 to 38; Sep 23 to 39; back to 38 today). That pattern looks like late-cycle mean reversion with “spike risk”—i.e., the economy is not rolling over broadly, but the system is increasingly sensitive to catalysts (policy tightness, household stress, or a sudden spread-widening episode).

Key Drivers

1. Labor-market recession trigger remains clearly untriggered

   • Sahm Rule: -0.07 (SAFE) — well below the recession-onset threshold, signaling no broad-based unemployment acceleration consistent with recession start.
   • Initial jobless claims: 196k (week ending Sep 12, 2026, released Sep 17, 2026) — consistent with low layoffs. (dol.gov)

2. Fed policy moved incrementally more restrictive (margin matters late-cycle)

   • On Sep 16, 2026, the FOMC raised the target range to 3.75%–4.00%; the Fed’s IORB was set to 3.90% effective Sep 17. (federalreserve.gov)
   • Even if “one hike” isn’t a cliff, it increases downside convexity: if hiring cools, policy can tighten financial conditions quickly through rates, credit, and sentiment.

3. Growth tracking is still positive—and one tracker is very strong

   • Atlanta Fed GDPNow (2026:Q3): 5.1% as of Sep 17, 2026—a strong real-time signal that the quarter’s hard data flow has not collapsed. (atlantafed.org)
   • NY Fed Staff Nowcast (2026:Q3): 2.3%—still clearly positive, though less exuberant than GDPNow. (newyorkfed.org)

4. Leading indicators: mild deterioration, not a 3D “collapse,” but momentum isn’t clean

   • The Conference Board LEI fell -0.1% in August 2026 to 99.5 after +0.2% in July; importantly, the six-month growth is only slightly negative, suggesting softening rather than a decisive downturn. (conference-board.org)

5. Cyclical micro-signals are flashing amber/red

   • Temporary Help Services: 2520K (DANGER) — temp help is a classic early labor-cycle margin adjuster; persistent declines are recession-relevant even when headline payrolls look fine.
   • Freight Transportation Index: -0.3 (DANGER) — consistent with a goods-side slowdown and weaker cyclical throughput.

6. Household buffers are thin; credit stress is creeping

   • Personal savings rate: 3.0% (WARNING) — low cushion, high fragility to any unemployment uptick.
   • Credit card delinquency: 2.9% (WATCH) and debt service ratio: 11.2% (WATCH) — not crisis levels in isolation, but directionally consistent with rising strain.

Category Breakdown

(Counts below are taken directly from your CATEGORY BREAKDOWN block.)

• Primary Indicators: 3 safe / 4 watch / 2 danger
  Mixed but not recessionary: the core macro regime remains stable, yet the “watch/danger” cluster shows late-cycle weakening is real, just not broad enough yet to flip the system.

• Secondary Indicators: 2 safe / 0 watch / 1 danger
  Secondary signals lean stable overall, but the presence of a danger reading implies pockets of cyclicality are deteriorating faster than the headline macro narrative.

• Housing & Construction: 0 safe / 0 watch / 2 danger
  Housing is the cleanest weak spot: starts and permits are both warning/danger, consistent with the sector remaining rate-sensitive after the Fed’s September hike. (census.gov)

• Business Activity: 2 safe / 1 watch / 0 danger
  Business activity is still supportive of expansion—this helps explain why markets remain resilient and why the score isn’t drifting upward over 30 days.

• Consumer Credit Stress: 1 safe / 2 watch / 1 danger
  This is the asymmetric risk bucket: when savings are low and delinquencies rise, the economy can look fine—until it doesn’t. Watch for a feedback loop into retail demand.

• Market Signals: 6 safe / 3 watch / 5 danger
  Markets are sending a split message: equities and spreads look calm (risk-on), while valuation/fear/commodity ratios embed tail risk and late-cycle fragility.

• Liquidity: 0 safe / 1 watch / 2 danger
  Liquidity is a quiet driver of future volatility. The ON RRP drawdown/depletion changes where cash sits in the system and can interact with Treasury supply and funding conditions.

• Real-Time / High-Frequency: 0 safe / 1 watch / 1 danger
  The “fast” data are the most likely to turn first. This bucket argues for discipline: don’t overreact to one week, but don’t ignore inflection.

Biggest Movers

From your BIGGEST MOVERS (top 5 by absolute 7-day % change):

1. ON RRP Facility ($5B): -94.4% (7D)
   This is contradictory-to-risk in the very near term (it can coincide with abundant liquidity/risk-on), but it can also become confirmatory later if it coincides with tighter funding conditions elsewhere. Net: a structure change more than a recession alarm by itself.

2. NY Fed Recession Probability (0.9%): -90.9% (7D)
   Contradictory (improving) relative to recession risk—this move mechanically reduces near-term recession odds implied by that model input.

3. Yield Curve (2s10s) (0.26): +20.0% (7D)
   Contradictory (improving) versus the classic inversion signal. A modestly positive/steepening curve reduces the “textbook” warning—though steepening late-cycle can also be a normalization phase before broader slowing.

4. Chicago Fed NFCI (-0.56): -6.7% (7D)
   Contradictory (improving): looser financial conditions reduce immediate recession pressure and support risk assets.

5. Yield Curve (2s30s) (0.81): +5.0% (7D)
   Mild contradictory (improving): reinforces that the curve is not screaming “credit event.”

90-Day Indicator Trends

Your 90-day history window (as provided) captures a regime where headline macro stability coexists with under-the-surface late-cycle stress.

Labor & “recession tripwires”

• Sahm Rule improved from 0.10 (Jun 26) to 0.07 (Jul 16) in the history block—moving away from trigger conditions (directionally constructive).
• Initial claims in the history block sit at 215k through mid-July; the more recent official read is 196k (Sep 17 release), i.e., claims have improved vs the ~215k level shown in the earlier window. (dol.gov)
• Unemployment rate in the history block drifts from 4.3% (Jun 26) to 4.2% (mid-July); today’s reading is 4.1% (WATCH). Net: no deterioration in the unemployment rate trend over this window, which is consistent with why the score won’t break higher without a labor catalyst.

Growth & activity

• Industrial production edges up from 102.6 (Jun 26) to 103.1 (today)—a modest improvement, consistent with “still expanding.”
• Real personal income (ex transfers) is flat in the history block at $16.6T; today it remains a WATCH—stable but not accelerating.
• GDPNow and NY Fed nowcast remain positive, with GDPNow 5.1% on Sep 17 and NY Fed at 2.3% for 2026:Q3. (atlantafed.org)

Housing (rate-sensitive soft spot)

• The Census release shows building permits (Aug 2026) at 1,394,000 SAAR (and starts data in the same release). (census.gov)
• In your indicator set, both permits (WARNING) and starts (WARNING) remain below trend—housing continues to look like a policy transmission channel, particularly after the September hike. (federalreserve.gov)

Financial conditions & credit

• NFCI is loose through the history block (around -0.52 to -0.54), and today is -0.56 (SAFE): financial conditions are not recessionary.
• High-yield OAS stays tight (~270 bps) across the sample—this is one of the strongest “not now” signals.
• However, bank unrealized losses remain high in your dashboard ($5,155B WARNING), implying latent sensitivity to rate volatility (more a financial-stability tail than an immediate recession driver).

Markets & risk pricing

• VIX falls from ~18.6 (Jun 26) to the mid-teens in the history window; today it’s 15.4 (SAFE), consistent with complacency rather than stress.
• Equity indexes in your set are near highs (S&P 500, NASDAQ, DJIA), while valuation ratios (e.g., S&P P/E 22x, NASDAQ/GDP DANGER) argue that markets are pricing a benign growth path with low margin for error.

Bottom line from the 90-day tape: recession risk is not trending higher, but the economy looks like it’s in a “stable, late-cycle” equilibrium where small shocks (labor, oil/yields, spreads) can matter disproportionately.

Stock Screener Signals

Today’s quant flags skew heavily toward “value dividend” exposures—financials/insurers (AIG), telecom (T), dividend vehicles (ARCC), and a consumer cyclical (BBY)—plus a couple of “oversold growth” names (CHTR, TLK). In macro terms, that mix often appears when the market is not pricing imminent recession, but investors still want cash-flow visibility and valuation support.

Two important caveats from the raw output:

• The displayed dividend yields (e.g., ARCC “1002%,” AIG “257%”) are obviously data-quality artifacts rather than investable yields. Treat the screener’s style tags (value/dividend vs oversold growth) as the signal, not the literal yield figures.
• The presence of oversold growth (e.g., CHTR RSI 28) alongside value/dividend suggests a barbell: investors are simultaneously hunting for mean reversion in beaten-up growth while maintaining a defensive income/value anchor.

Macro interpretation: the screener is consistent with a moderate-risk, late-cycle environment—not “dash to cash,” but also not pure high-beta euphoria. That aligns with today’s score holding at 38: the market is relaxed, but the model remains alert to fragility in household buffers and cyclical micro-data.

Latest Economic Developments

Fed: The defining macro development remains the Sep 16, 2026 FOMC hike, lifting the funds target range to 3.75%–4.00%, with IORB at 3.90% effective Sep 17. The Fed’s stance matters here because the economy is not contracting—but late-cycle tightening can convert “slowdown risk” into “slowdown reality” if labor softens. (federalreserve.gov)

Labor: The latest weekly claims print is 196,000, the lowest since mid-July, reinforcing that layoffs remain rare and recession odds over the next 1–3 months remain contained. (apnews.com)

Growth nowcasts: The real-time growth picture remains constructive:

• Atlanta Fed GDPNow: 5.1% (2026:Q3) as of Sep 17. (atlantafed.org)
• NY Fed Staff Nowcast: 2.3% (2026:Q3). (newyorkfed.org)

Leading indicators: The Conference Board’s LEI down -0.1% in Aug 2026 to 99.5 shows mild deterioration and aligns with “moderate risk” rather than “imminent recession.” (conference-board.org)

Markets (past 48 hours): Newsflow highlights a market that is still near highs but increasingly rate/yield sensitive. Reuters’ US market recap on Sep 23, 2026 cited the 10-year yield at a 2007 high and tied the move to strong business-activity survey results and expectations for another Fed hike at the next meeting. (fidelity.com)
This is consistent with the model’s posture: risk assets can stay buoyant even as the recession score stays moderate—until yields/spreads force a re-pricing.

Near-Term Outlook (Next 30 Days)

The next month is about whether labor remains resilient under incrementally tighter monetary policy and higher long-end yields.

Key near-term catalysts:

• Weekly initial claims: A sustained move above roughly 230k–250k (as you noted) would be the fastest credible “regime change” signal, especially if paired with rising continuing claims.
• Consumer confidence/sentiment: Michigan sentiment and inflation expectations have been volatile recently; watch whether weak sentiment begins to translate into weaker real consumption rather than remaining a “feelings” recession. (kiplinger.com)
• Treasury yields and spreads: If yields remain near/above the psychologically important 5% area and HY spreads widen meaningfully, recession risk can rise quickly even if equities appear calm. (fidelity.com)

Tactical base case (30 days): Score likely stays in the mid/high-30s absent a labor deterioration. Upside risk to the score (into the 40s) is mostly a function of claims + credit spreads moving together.

Long-Term Outlook (3-6 Months)

The 3–6 month window is where “moderate” can turn into “material”—not because recession is imminent today, but because the system is showing a classic late-cycle mix:

• Still-expanding hard data (claims low, production okay, GDP nowcasts positive) supports the view that the economy can continue to grow.
• Fragile buffers and leading micro-weakness (temp help, freight, low savings) raise the probability that a negative shock propagates if unemployment starts to rise.
• Policy is no longer easing at the margin; the Fed has signaled willingness to prioritize inflation risk, and a restrictive drift tends to show up with a lag. (federalreserve.gov)

History rhymes here: many cycles do not end when the headline data first soften; they end when a labor inflection meets a financing/credit inflection. In this dashboard, the “credit” half (HY OAS, NFCI) is still benign, which is why the long-term outlook is slowdown risk > recession certainty.

What to Watch

Labor (highest weight):

• Sahm Rule: watch for a sharp move toward the trigger zone (today: -0.07).
• Initial claims: sustained break above 230k–250k.

Credit and liquidity (fast amplifier):

• HY OAS: regime change would be a move from ~270 bps into a persistent widening trend.
• NFCI: watch for a move toward neutral/tightening (from -0.56).
• Funding/liquidity plumbing: continued ON RRP depletion and any signs of money-market stress.

Housing (transmission channel):

• Permits/starts: continued deterioration would imply policy is biting harder and could bleed into construction employment and durables.

Leading indicators:

• LEI: a shift from “edging down” to a multi-month decline would be a meaningful confirmation of late-cycle rollover. (conference-board.org)

Sources

• apnews.com
• apnews.com
• axios.com
• theweek.com
• federalreserve.gov
• federalreserve.gov
• atlantafed.org
• newyorkfed.org
• dol.gov
• conference-board.org
• census.gov
• data.sca.isr.umich.edu
• fidelity.com
• kiplinger.com
• sucdenfinancial.com