H.O.P.E Cycle
Created by Michael Kantrowitz, Chief Investment Strategist at Piper Sandler. The H.O.P.E framework tracks the sequence of economic weakening that typically precedes a recession: Housing, Orders, Profits, Employment.
Improving on orders, softer on housing. Orders and profits expanding, housing and employment stable.
Housing
First to weaken
Housing permits at 1,400K in September, down from 1,433K in July and broadly flat for a year.
Orders
Second to weaken
ISM New Orders at 55.3 in September, up from 53.7 in August, well above the 50 line.
Profits
Third to weaken
Corporate profits at a record $5,112.0B in Q2 2026, up about 9.4% on the quarter.
Employment
Last to weaken
Unemployment at 4.2% in September, up from 4.1%.
The Economic Sequence
Housing
Higher interest rates increase mortgage costs, reducing demand for new homes. Kantrowitz argues housing is usually first to weaken, because it is the part of the economy most sensitive to interest rates.
Orders
The framework uses the ISM Manufacturing New Orders index.
Profits
Initially sustained through cost cutting, corporate earnings deteriorate as consumer spending slows and financing costs rise. Companies may halt expansion plans and reduce payroll.
Employment
Worker layoffs follow aggressive corporate downsizing, reflecting broader economic distress. In Kantrowitz's sequence, employment turns last.
About Michael Kantrowitz
Michael Kantrowitz serves as Chief Investment Strategist and Head of Portfolio Strategy at Piper Sandler.