Weekly Recession Report — March 1, 2026

March began with a familiar split screen: financial conditions remain loose and markets are calm, while several real-economy leading indicators are flashing yellow-to-red. This week’s dashboard is dominated by two competing narratives. On the “soft-landing” side, initial jobless claims are still low (212K), the yield curve is positively sloped (2s10s +0.59), and credit spreads are tight (HY OAS 298 bps)—all inconsistent with an imminent recession. On the “late-cycle risk” side, temporary help and freight are deteriorating, the Conference Board’s expectations components remain below recession-warning thresholds, and the economy is running close to stall speed (GDP +1.4% QoQ annualized; GDPNow ~1.8%). Net: recession risk is elevated but not yet “base case,” with the highest probability path looking like continued deceleration plus a rising risk of a policy/credit “accident” if labor market cooling accelerates.

Primary Indicators (Highest Signal Weight)

Industrial Production (SAFE): 102.3 — expanding

Your SAFE read aligns with a still-growing production base. This is important because it argues against a current contraction, even as goods-sensitive indicators weaken elsewhere (notably freight). The key question for the next 4–12 weeks: whether production follows freight lower (a classic sequencing) or holds up on services/energy/defense resilience.

Labor Market – Unemployment Rate & Sahm Rule (WATCH): U-3 4.3%; Sahm 0.30

Unemployment at 4.3% is consistent with a cooling labor market but not yet recessionary by itself.
Sahm Rule at 0.30 is “elevated” and worth close monitoring, but still below the typical 0.50 recession trigger used in many frameworks.

Fed officials are explicitly framing upcoming labor prints as pivotal for March policy. Fed Governor Christopher Waller called a March cut a “coin flip,” emphasizing dependence on the next jobs report. (apnews.com)

Initial Jobless Claims (SAFE): 212K — healthy

Weekly claims remain the cleanest “here-and-now” labor stress gauge, and this week they stayed firm:

Initial claims: 212,000 (week ending Feb 21, 2026)
4-week average: ~220,250
Continuing claims: ~1.83M (down on the week) (apnews.com)

This is not what an economy on the cusp of recession typically looks like. For recession risk to jump quickly, we would need to see claims trend sustainably above ~250K with accelerating continuing claims.

Conference Board LEI (WARNING/DANGER): -0.3 — recession signal active

Your composite flags the LEI as a major negative. Even if other “current” indicators are holding up, LEI deterioration matters because it often turns before the labor market does. Separately, the Conference Board’s consumer data show expectations remain under the “danger zone” threshold frequently associated with recession risk (expectations index below 80). (apnews.com)

Bottom line (Primary): The current economy is still expanding, but forward-looking breadth is weakening—with the labor market the swing factor.

Secondary Indicators (Growth, Labor Internals, Housing, Households)

JOLTS Quits Rate (WATCH): 2.0% — moderating

A quits rate around 2.0% signals reduced worker bargaining power vs. the post-pandemic peak. That typically cools wage pressure and consumption momentum, but it can also precede rising layoffs if business confidence cracks.

Manufacturing Employment (WATCH): 12.6M — below trend

Manufacturing employment below trend fits the “goods recession / services resilience” pattern. A key nuance this cycle: hiring has been “low-hire, low-fire,” making unemployment less sensitive—until it suddenly isn’t.

Temporary Help Services (DANGER): 2,480K — sharp decline

Temp help is one of the best early-cycle labor canaries. Your DANGER rating is directionally consistent with broader late-cycle behavior: companies cut flexible labor first. RecessionPulse also characterizes the current print (2,480K, updated Feb 25) as a sharp decline and a leading recession signal. (recessionpulse.com)

Real Personal Income ex-Transfers (WATCH): $16.6T — monitor trend

Income is the bridge between labor and consumption. With sentiment weak and savings low, income growth needs to do more of the stabilization work. Watch for deceleration in real wage and salary disbursements.

Housing – Starts & Permits (WATCH): Starts 1,404K; Permits 1,448K

Both are “moderate but slowing,” consistent with:

Higher-for-longer mortgage rate sensitivity
A shift from boom/bust construction cycles to a grind lower

Housing is not collapsing, but it is not a growth engine either—important when GDP is already near stall speed.

Household stress: savings, delinquency, debt service (WARNING/WATCH)

Personal savings rate: 3.6% (WARNING) is a critical vulnerability. A low savings buffer makes consumption more sensitive to job loss or credit tightening.
Credit card delinquencies: 2.9% (WATCH) and debt service: 11.3% (WATCH) indicate rising marginal stress.

Confidence (WARNING): UMich 56.4

Michigan sentiment remains weak in level terms; the final February reading showed 56.6 vs 56.4 in January, i.e., stagnation at depressed levels rather than rebound. (sca.isr.umich.edu)

Bottom line (Secondary): The consumer is more fragile than headline employment implies—because the cushion (savings) is thin and credit stress is rising.

Liquidity & Policy Indicators (Fed stance, reserves, money, banking)

Fed policy rate (SAFE): 3.6% — accommodative

The FOMC held the target range at 3.5%–3.75% at the January meeting, with two dissenters preferring a 25 bp cut, and confirmed the next meeting is March 17–18, 2026. (federalreserve.gov)
Messaging this week from Fed speakers leaned cautious given inflation persistence: Chicago Fed’s Austan Goolsbee argued against premature cuts with inflation still around ~3% vs the 2% target. (barrons.com)

ON RRP (WARNING): $16B — nearly depleted

A near-empty ON RRP facility usually means excess cash has been absorbed into the system and money-market plumbing is operating closer to “normal.” That can be fine—until it isn’t: with less cash parked at the Fed, liquidity shocks can transmit faster. In your framework, this is appropriately a WARNING because it reduces the system’s “shock absorber.”

M2 (WATCH): $22.4T — monitor YoY

Money supply level matters less than trajectory. The key risk: if bank credit creation slows while fiscal borrowing costs rise (see interest expense), private demand can decelerate quickly.

Bank unrealized losses (WARNING): $500B

With large mark-to-market pressure still embedded, the banking system remains vulnerable to a sudden rate or liquidity shock. This is a classic “not a recession by itself, but a recession accelerant” factor.

Bottom line (Liquidity): Policy is no longer “tightening,” but inflation stickiness is limiting how quickly the Fed can ease, while system liquidity buffers (RRP) are thinner.

Market Indicators (Financial conditions, spreads, volatility, FX, curves)

Chicago Fed NFCI (SAFE): -0.56 — loose

The Chicago Fed reported the NFCI at -0.56 (loose conditions) in the referenced week, reinforcing that financial conditions are not currently acting as a brake. (chicagofed.org)

Credit spreads (SAFE): HY OAS 298 bps — tight

Tight spreads signal that markets are not pricing near-term default stress. That usually reduces recession odds unless spreads are “wrong” due to abundant liquidity and risk appetite.

VIX (SAFE): 18.6 — low

Low volatility complements tight spreads: risk markets are not signaling imminent recession. The risk is complacency—if labor cracks, repricing can be swift.

Yield curves: (SAFE/WATCH)

2s10s: +0.59 (SAFE): “normal” curve generally argues against immediate recession.
2s30s: +1.26 (WATCH): steepening can occur in healthy reflation—but also in “Fed-cut” anticipation regimes. Given Fed officials’ mixed messaging and inflation still sticky, this steepening is a watch signal rather than a clear all-clear.

Dollar (SAFE): DXY 118

A stable dollar reduces immediate external stress, but a strong/stable dollar can still be a headwind for manufacturing and some EM-sensitive sectors—consistent with your “EM bullish but signals US deceleration” interpretation.

Inflation impulse (relevant this week)

January wholesale inflation surprised to the upside: PPI +0.5% m/m and +2.9% y/y, with core measures also firm—supporting the “Fed can’t cut aggressively” constraint. (barrons.com)

Bottom line (Markets): Markets are still priced for contained macro risk. That makes the next leg of recession risk more dependent on real-economy deterioration (temp help, freight, LEI) translating into claims/unemployment.

Conclusion & Outlook (Next 4–12 weeks)

RecessionPulse Weekly Call (week of March 1, 2026): Elevated risk, not imminent—late-cycle slowdown with two red flags that matter.

The strongest recession-leading evidence is in temp help and freight. Those are classic early warnings, and they align with your LEI danger signal.
The strongest “not-yet” evidence is still in claims, spreads, and overall financial conditions. At 212K claims and HY OAS ~298 bps, the macro system is not behaving like the doorstep of recession.

What would make risk rise quickly:

Claims trend breaks higher (and continuing claims turns up)
Unemployment ticks higher enough to push Sahm toward 0.50
Credit spreads widen materially alongside tighter bank lending or renewed funding stress

What would ease risk:

Stabilization in temp help and freight, plus LEI improvement
Continued positive curve slope with inflation cooling enough to permit gradual Fed easing without destabilizing expectations

The next inflection is likely to come from labor market data and the Fed’s March 17–18 meeting, where policymakers must balance a slowing growth backdrop against inflation that’s proving sticky near ~3%. (barrons.com)