Updated 7 June 2026
Recession Indicators
The 10 economic indicators that have historically predicted US recessions. What they measure, how reliable they are, and their current status.
7
Indicators stable
3
On watch
0
Warning signals
1. Yield Curve Inversion
When short-term Treasury yields exceed long-term yields (e.g., 2-year > 10-year)
Track record
7 of the last 7 recessions were preceded by yield curve inversions. The curve inverted in 2022 and stayed inverted into 2024.
Lead time
12-18 months before recession
2. Initial Jobless Claims
Weekly new unemployment insurance filings, reported every Thursday
Track record
Sustained increases above 300,000/week signal trouble. Currently around 210,000-230,000 (healthy).
Lead time
Real-time indicator
3. ISM Manufacturing PMI
Monthly survey of purchasing managers. Below 50 = contraction
Track record
Readings below 45 for 3+ months have preceded every recession since 1970.
Lead time
0-3 months
4. Consumer Confidence Index
Monthly survey measuring consumer optimism about economy
Track record
Sharp drops (20+ points) over 3 months often precede recessions. Consumers cut spending when pessimistic.
Lead time
1-3 months
5. Sahm Rule
Recession signal when 3-month moving average of unemployment rises 0.5% above its 12-month low
Track record
Created by Fed economist Claudia Sahm. Has identified every recession since 1970 in real time.
Lead time
Real-time
6. Leading Economic Index (LEI)
Conference Board composite of 10 leading indicators
Track record
6 consecutive monthly declines signal recession within 6-12 months.
Lead time
6-12 months
7. Housing Starts
New residential construction begins, reported monthly
Track record
Steep drops (30%+) often precede or coincide with recessions. Housing is ~15% of GDP.
Lead time
0-6 months
8. Corporate Profit Margins
S&P 500 quarterly earnings margins
Track record
Two consecutive quarters of declining margins often signal broader economic weakness.
Lead time
3-6 months
9. Credit Spreads
Difference between corporate bond yields and Treasury yields
Track record
Widening spreads (above 5%) signal stress in credit markets. Happened before 2008 and 2020.
Lead time
3-9 months
10. Retail Sales
Monthly consumer spending at retail businesses
Track record
Three consecutive months of declining real (inflation-adjusted) retail sales is a warning sign.
Lead time
Real-time