Recession Probability 2026 — Is a Recession Coming?
As of Sep 10, 2026, the composite crash-risk score is 67.0% and the growth-probability score is 100.0%, putting the overall regime at NEUTRAL MARKET. The regime is decided by a fixed rule: crash risk above 50% with growth probability at or below 50% reads CRASH RISKY, growth probability above 50% with crash risk at or below 50% reads GROWTH POSITIVE, and anything in between reads NEUTRAL MARKET.
Crash Risk Indicators
These three indicators have historically preceded major market crashes and recessions.
Market capitalization to GDP ratio. Warren Buffett's preferred valuation metric for the overall stock market.
US Treasury yield curve spread (10Y-2Y). Negative values indicate inversion, often predicting recession.
Cyclically Adjusted PE Ratio (CAPE). Measures stock market valuation relative to 10-year average earnings. High values indicate overvaluation.
Growth Probability Indicators
These three indicators track monetary conditions and economic momentum that support market growth.
Measures the value of the US dollar against a basket of major currencies. For growth analysis, lower DXY change indicates better conditions for market growth.
Total money supply in circulation including cash, checking deposits, and easily convertible near money. Rapid growth can indicate inflationary pressure.
10-Year Treasury yield minus inflation rate. Negative values indicate favorable conditions for market growth.
How Our Recession Model Works
The model evaluates six economic indicators across two dimensions — crash risk and growth probability — to produce an overall recession regime reading.
Growth probability above 50% and crash risk at or below 50%. Monetary conditions and valuations support continued expansion.
Mixed signals across indicators. Both crash risk and growth probability near 50%, or conflicting readings between the two groups.
Crash risk above 50% and growth probability at or below 50%. Multiple indicators signaling overvaluation or economic weakness.
Prediction Methodology
Each indicator is compared against historically significant thresholds. The combined crash-risk percentage reflects how many indicators are in negative territory, while growth probability shows how many favor expansion.
- Yield Curve — an inverted yield curve has preceded every US recession since 1950.
- Buffett Indicator — market cap to GDP above 100% signals overvaluation historically linked to corrections.
- Shiller PE Ratio — CAPE above 30 has preceded every major market decline in the last century.
- US Dollar Index — extreme dollar strength creates global financial stress.
- M2 Money Supply — contracting money supply signals deflationary pressure and tightening liquidity.
- Real Interest Rates — sharply positive real rates increase borrowing costs and slow economic activity.
Explore Individual Indicators
Market cap to GDP — Warren Buffett's valuation metric
10Y-2Y spread — #1 recession predictor since 1950
CAPE ratio — 10-year smoothed valuation
DXY dollar strength against major currencies
M2 money supply growth rate
Inflation-adjusted interest rates