Weekly Recession Report — March 29, 2026

Weekly Recession Report — Week of March 29, 2026

The recession backdrop remains mixed but not yet decisively contractionary. “Primary” real-economy gauges you provided (Industrial Production expanding; Sahm Rule still well below trigger; initial claims still low) argue for continued—if slower—growth. However, an increasingly consistent set of leading-cycle warnings is building: a sharp decline in temporary help, a weak freight backdrop, and an extreme risk-off signal in the copper-to-gold ratio. Meanwhile, the policy/financial backdrop is oddly bifurcated: the Fed is holding rates steady at 3.50%–3.75%, but inflation-sensitive data (notably February PPI) were hot, and households’ confidence remains weak. Equity markets are near highs and volatility is subdued—conditions that often coexist with late-cycle complacency rather than early-cycle resilience. (apnews.com)

Primary Indicators (highest signal-to-noise)

Industrial Production (SAFE): 102.6 — Expanding

Industrial output remains a stabilizer. Production expanding is consistent with an economy that is decelerating rather than contracting. The key question is whether production holds up as hiring softens in cyclically sensitive segments (temp help, freight, manufacturing employment).

Labor market “recession triggers”

Sahm Rule (SAFE): 0.27 — still comfortably below the typical recession trigger level (0.50).
SOS Recession Indicator (SAFE): 1.20 — consistent with low insured unemployment and no broad-based layoffs wave yet.
Initial Jobless Claims (SAFE): 210K — the latest weekly claims reading is still historically healthy; for the week ending March 21, claims rose to 210,000 (from 205,000), and the four-week average was ~210,500. (apnews.com)

Interpretation: This cluster still says “no recession now.” Claims at ~210K typically align with stable labor demand, even if hiring is cooling. The recession risk is more about forward momentum: temp help falling and quits moderating can precede a broader labor rollover.

Unemployment Rate (WATCH): 4.4% — Ticking up

At 4.4%, unemployment is not high in absolute terms—but direction matters. This level also lines up with what Fed projections have discussed for end-2026 (i.e., policymakers are implicitly acknowledging some labor cooling). (breitbart.com)

Yield Curve (SAFE)

2s10s: +0.56
2s30s: +0.97

A normal, positive curve reduces near-term recession odds versus inversion regimes. It also suggests markets are not pricing an imminent policy panic.

Secondary Indicators (cycle direction and propagation)

Manufacturing Employment (WATCH): 12.6M — Below trend

Manufacturing hiring below trend is consistent with a goods-side slowdown and aligns with the freight weakness you flagged. The risk is that manufacturing softness spills over into services via income and confidence channels.

JOLTS Quits Rate (WATCH): 2.0% — Moderating

A quits rate drifting down is a classic “cooling” signal: workers feel less confident switching jobs, wage pressure eases, and consumer spending becomes more sensitive to shocks.

Real Personal Income ex Transfers (WATCH): $16.7T (annualized)

Income is a “slow mover” and typically deteriorates later than hiring indicators like temp help. With savings low (see below), the economy becomes more dependent on continued job and wage growth to sustain consumption.

Housing: permits warning while starts moderate

Building Permits (WARNING): 1,386K
Housing Starts (WATCH): 1,487K

Housing is sending a nuanced message: starts are not collapsing, but permits are below trend, which usually leads starts with a lag. Some February housing data showed starts around 1.487M SAAR (reported in multiple market-data summaries), which is consistent with your reading. (sigmanomics.com)

Interpretation: Treat housing as late-cycle fragile: not breaking, but vulnerable if rates rise, credit tightens, or labor cools further.

Inventory-to-Sales (WATCH): 1.36 — Slightly elevated

Elevated inventories can amplify downturns if final demand slows—firms cut production and hours to clear stock. Watch whether inventory accumulation is intentional (optimism) or accidental (demand miss).

Confidence (WARNING): UMich Sentiment 56.6 — Weak

The University of Michigan site shows sentiment in the mid‑50s range and highlights the final March release date (March 27, 2026). A 56-handle is historically subdued and consistent with households perceiving high living-cost stress and/or macro uncertainty. (sca.isr.umich.edu)

Liquidity & Policy Indicators (funding, credit creation, fiscal constraints)

Fed Funds (SAFE): 3.6% — “Accommodative” in your framework

The Fed held its target range at 3.50%–3.75% at the March 18, 2026 meeting; the implementation note also kept IORB at 3.65% effective March 19. (federalreserve.gov)
However, a crucial “this week” nuance is inflation pressure: February PPI rose 0.7% m/m and 3.4% y/y, hotter than expected, which tends to bias the Fed toward patience rather than cuts. (kiplinger.com)

Interpretation: Policy may be “less restrictive” than last year, but not necessarily supportive if inflation re-accelerates. A “higher-for-longer” hold is not recessionary by itself, but it raises the bar for a soft landing if private-sector margins compress and hiring softens.

Money & bank plumbing

M2 (WATCH): $22.7T
ON RRP (WARNING): $992M — essentially depleted

A near-depleted ON RRP suggests excess cash has largely been reallocated into bills/banks/markets. That doesn’t automatically mean stress—but it does reduce a readily available “buffer” that previously absorbed liquidity swings. In a shock, marginal funding conditions can tighten faster.

Banking system vulnerability (WARNING)

Bank Unrealized Losses (HTM): ~$5.155T This is a major tail risk: unrealized losses are not the same as realized solvency problems, but they can become acute if deposits move or if banks are forced to sell duration assets. In an environment where confidence is weak and credit stress is rising at the margin (see delinquencies/spreads), this is a classic liquidity shock amplifier.

Credit & lending standards (WATCH)

HY OAS: 321 bps — Elevated Credit spreads in the low‑300s bps range are not “crisis,” but they’re no longer ultra-easy money. This is consistent with tighter marginal financing conditions for lower-rated borrowers. (Market series around early March show mid‑3% OAS readings.) (ycharts.com)
SLOOS tightening: 5.3% — modest Modest net tightening suggests no credit crunch, but also no broad easing impulse.

Fiscal constraints (DANGER/WARNING)

National debt: $38.5T (DANGER)
Debt/GDP: 122% (WARNING)
Interest expense: ~$1.227T/yr (WARNING)

This is the longer-horizon recession accelerant: limited fiscal space reduces the odds of a fast, large countercyclical response if the cycle turns. It also raises the probability that future policy choices become pro-cyclical (austerity impulses) during weakness.

Market Indicators (risk appetite vs. real-economy signals)

Equity risk appetite: “calm surface”

S&P 500: 6592 (SAFE), NASDAQ: 20948 (SAFE), Dow: 46429 (SAFE)
VIX: 18 (SAFE)

Risk assets near highs with a low VIX indicate benign financial conditions and strong appetite for duration/earnings risk. This reduces near-term recession odds because it supports wealth effects and keeps corporate funding open.

Valuation & “froth” (WATCH/WARNING)

S&P P/E 22x (WATCH), NASDAQ P/E 30x (WATCH)
NASDAQ/GDP ratio elevated (WARNING)

High valuations aren’t a recession signal by themselves, but they matter because they reduce shock-absorption: if earnings disappoint or rates drift higher due to inflation, equity downside can quickly tighten financial conditions.

Growth-sensitive cross-asset warnings (DANGER/WARNING)

Copper-to-Gold ratio: 0.00077 (DANGER) — “industrial fear”
Gold-to-Silver ratio: 85 (WARNING) — defensive positioning
Freight Transportation Index: -0.5 (DANGER)

This is the most troubling market/economic combo in your dashboard: copper/gold and freight tend to sniff out goods-cycle slowdowns early. When they diverge sharply from equity calm, it often signals either (a) equities are right and the slowdown stabilizes, or (b) equities are late to reprice.

Dollar (WATCH): DXY 96.5 — weakening

A softer dollar can ease financial conditions globally and support EM risk (your EM indicator is “SAFE/bullish”). But persistent dollar weakness can also reflect relative U.S. growth slowing vs. peers.

Conclusion & Outlook

Near-term (next 1–3 months): Primary recession triggers remain inactive. Claims near 210K, a 0.27 Sahm reading, and a positively sloped yield curve all argue against an imminent recession call. (apnews.com)

However, recession risk is rising in the “leading edge” of the cycle. The sharp temp help decline (DANGER) and freight weakness (DANGER) are consistent with an economy that is losing momentum in the goods/production ecosystem. Weak sentiment near the mid‑50s reinforces downside risk to consumption, especially with a low savings rate and rising debt service burden. (sca.isr.umich.edu)

Policy/markets are the swing factor. The Fed is holding at 3.50%–3.75%, but hotter inflation signals (e.g., February PPI 0.7% m/m, 3.4% y/y) reduce the probability of fast easing if growth slips—raising the risk of a “slow-growth, sticky-inflation” trap that pressures margins and hiring. (kiplinger.com)

RecessionPulse baseline (for this week)

Base case: Slow growth / late-cycle cooling, recession not imminent.
Risk case: Labor market breaks later in 2026 if temp help weakness spreads to broader payrolls and if bank/credit plumbing tightens unexpectedly.
What to watch next week: (1) whether claims hold ~210K or trend up, (2) any further downshift in quits/hiring, (3) housing permits continuation below trend, (4) HY spreads—do they widen from the low‑300s, and (5) whether equities continue to ignore the copper/gold and freight warnings.

If you want, I can convert this into a scored dashboard (0–100 recession risk) using your SAFE/WATCH/WARNING/DANGER classifications and explicitly weight Primary vs Secondary vs Liquidity vs Market signals.