PortfolioAI macro research
U.S. Recession Risk Dashboard
Soft-landing evidence still leads, but tighter credit remains the key vulnerability.
As of August 12, 2026
Executive Summary
Low
The Sahm measure is -0.03, far below its 0.50 trigger, while unemployment is 4.1% and trending lower in the latest observation.
Moderate
Bank conditions are the clearest pressure point at 8.3. Credit is restrictive enough to slow activity, even though it has not produced a broad contraction.
Moderate-low
Prediction-market pricing near 9–10% supports a soft landing as the base case, but leaves room for a growth shock or labor-market turn.
Base case: continued expansion at a slower pace. Real GDP stands at 24,270.6 billion chained dollars, the recession-probability model is 0.60%, and public search interest has cooled sharply from the prior month.
Portfolio implication: remain invested with a quality and liquidity bias. Favor companies with durable cash generation and manageable refinancing needs; use defensives and duration as selective insurance rather than as a wholesale recession call.
Leading Recession Signals
Labor stress remains below trigger
Sahm Rule Current and unemployment rate, latest available observations.
Credit caution versus model risk
Bank Conditions Index and recession-probability model; scales are intentionally separate.
Output and liquidity cushion
Real GDP and money-market fund assets. The latter's latest reported observation is January 2026.
Recession Indicator Risk Table
| Indicator | Latest | Date | Risk read | Portfolio interpretation |
|---|---|---|---|---|
| Sahm Rule Current | -0.03 | 2026-07-31 | Low | The 0.50 recession trigger is not close; labor-market deterioration is not broad enough to confirm contraction. |
| Unemployment Rate | 4.1% | 2026-07-31 | Moderate | The rate has cooled from its cycle low but is not showing the sustained acceleration that usually accompanies recession. |
| Bank Conditions Index | 8.3 | 2026-05-08 | Moderate | Credit remains the principal caution flag; the latest reading is materially higher than early-2026 levels. |
| Recession Probability Model | 0.60% | 2026-08-12 | Low | The model signal remains subdued, arguing against an imminent downturn while still requiring trend monitoring. |
| Real GDP | 24,270.6 | 2026-08-12 | Low | The output level continues to expand; a positive level is consistent with slowing growth, not a confirmed contraction. |
| Money Market Fund Assets | $8.29T | 2026-01-30 | Neutral | Large liquidity reserves provide a cushion, but also show that investors retain meaningful defensive capacity. |
| Recession Search Interest | 1,582 | 2026-08-10 | Cooling | Searches are down 25.0% week over week and 39.6% over roughly 30 days, reducing the urgency signal. |
| Prediction-Market Reference | ~9–10% | 2026-08-12 | Low | Polymarket pricing implies a low but non-zero chance of a U.S. recession by year-end 2026. |
Professional Commentary & Outlook
The recession debate is currently a contest between a healthy level of output and a less comfortable credit backdrop. The labor indicators do not confirm a downturn: the Sahm measure is deeply below its trigger, unemployment is 4.1%, and the model-implied recession probability is 0.60%. These are strong near-term arguments for expansion.
Credit deserves more weight over the next six months. A high Bank Conditions Index can transmit slowly through small-business lending, housing, and capital expenditure. The signal becomes materially more bearish if it rises alongside a sustained increase in unemployment and a rollover in real GDP. Until then, it is a drag on growth rather than proof of recession.
Search interest is a useful real-time sentiment gauge, not a leading economic statistic. The latest 1,582 daily searches are down 25.0% from roughly a week earlier and 39.6% from roughly 30 days earlier. That cooling aligns with the low prediction-market odds, but neither measure should override employment, income, production, and sales data.
For PortfolioAI positioning, discipline is preferable to alarm. Keep exposure to profitable growth and secular demand, pair it with consumer staples, health care, utilities, Treasuries, or gold where appropriate, and preserve liquidity to act if the credit-labor combination deteriorates.
Reader-Facing Sources
- Federal Reserve Economic Data: Sahm Rule Current, unemployment, real GDP, recession probability, bank conditions, and money-market fund assets.
- DailySearchVolume: U.S. search interest for “recession.”
- Polymarket: market-implied odds for a U.S. recession by the end of 2026.