Where are we in relation to a recession?
Recession Score
51
Caution
Unchanged since 27 August 2026
10 of 13 pre-recession indicators have now triggered. The new one comes from revised data rather than a new move: after revisions, real retail sales never passed their April 2022 high, so that peak now counts. Against that, manufacturing is clearly expanding, with ISM New Orders at 55.3 in September, and the Conference Board LEI shows no recession signal. The live worries are inflation, back up to 3.72% year on year, and a Fed that raised rates in September.
TXMC 46.2 + H.O.P.E 5.0 + Standalone 0.0 = 51.2
How the score worksLast updated 25 October 2026
Monthly Change · August to October 2026
Score unchanged at 51. Better news from factories, worse news on inflation and rates.
Signals that eased
- ▼ ISM New Orders reached 55.3 in September, up from 53.7 in August, and the ISM Manufacturing PMI stood at 54.5. Manufacturing is expanding, and the Orders sector of H.O.P.E moves from contracting to expanding.
- ▼ The Conference Board LEI was unchanged at 99.6 in September and rose 0.6% over six months. The Conference Board says there is no recession signal, so the LEI moves from amber to green.
- ▼ Industrial production reached 103.95 in September, another new high.
- ▼ Corporate profits were revised to a record $5,112.0B for Q2 2026, about 9.4% up on the quarter.
- ▼ The S&P 500 set a new record of 7,819 on 6 October and traded around 7,757 on 21 October.
Signals worth watching
- ▲ The Fed raised rates. The effective federal funds rate went from 3.63% to 3.88% on 17 September, the first rise since 2023.
- ▲ CPI year on year jumped to 3.72% in September, from 3.35% in August and 3.30% in July. The inflation improvement reported in August has reversed.
- ▲ Revised retail sales data shows real sales never passed their April 2022 high of $229,244M. September was $221,536M, about 3% below it, so the Real Sales Peak step now counts as triggered.
- ▲ The yield curve flattened to +0.31% on 23 October, from +0.47% in late August.
- ▲ Unemployment ticked up to 4.2% in September from 4.1%, and the Sahm Rule rose from -0.07% to 0.00%.
- ▲ The smoothed recession probability rose to 0.62% in August from 0.24% in July. Still far below the 5% danger zone.
- ▲ Housing permits have eased to 1,400K in September from 1,433K in July. Housing moves from rebounding to stable.
Bottom line. The score is unchanged, but the picture underneath has shifted. Manufacturing is expanding, the LEI shows no recession signal, and profits, output and share prices are at records. One more pre-recession step now counts, because revised figures show real retail sales peaked in 2022. The thing to watch is inflation: CPI is back above 3.7%, and the Fed has started raising rates again.
Score History
Hollow points were set by judgement before the scoring method was written down in August 2026, so they are not directly comparable with the solid points. How the score works.
Recession Theories
TXMC Sequence
Pre-Recession12 of 31 sequence steps complete
10 of the 13 pre-recession steps have triggered. The newest, Real Sales Peak, comes from revised retail sales data showing the April 2022 high was never passed.
H.O.P.E Cycle
None contractingH
O
P
E
Improving on orders, softer on housing. Orders and profits expanding, housing and employment stable.
ClearBridge Anatomy
1 of 12 redClearBridge's Recession Risk Dashboard gives an overall expansion signal as of 30 September 2026. 11 of its 12 indicators are green. Job Sentiment is red, as it was in March and June. Housing Permits and Profit Margins, amber in March, have been green since June.
Standalone Indicators
What to Look For Next
The next dominoes
These indicators haven't triggered yet. When they do, the sequence progresses closer to recession.
Earnings Peak
Corporate profits at a record $5,112.0B in Q2 2026, up from $4,673.2B in Q1. No earnings peak.
Market High
S&P 500 set a record of 7,819 on 6 October 2026 and stood around 7,757 on 21 October. No cyclical top.
Industrial Production Peak
Industrial production at a new high of 103.95 in September 2026. No peak.
Key Metrics to Watch
Yield Curve Revert
Uninverted September 2024. Currently +0.31%, flatter than in August.
Tightening Ends
Fed cut from September 2024, then raised rates in September 2026. Effective rate 3.88%.
Stock Market Top
S&P 500 set a record of 7,819 on 6 October. No cyclical top.
CPI Reaccelerating
CPI year on year rose to 3.72% in September from 3.30% in July. Reaccelerating again.
Stay Updated
Get the monthly update by email. Plain English, no spam.