About this reference.
This document describes all 24 economic indicators used in the Recession Indicator
Dashboard, including the data source, signal logic, and academic rationale for each
threshold. Indicators are organized into four categories: leading (predictive),
recession probability indexes, coincident (real-time), and lagging (confirmatory).
The composite stress score weights yellow signals at 1 point and red signals at 3 points, with a maximum of 81 points (27 scored indicators × 3 points each). A score above 50% indicates significant recessionary stress across the scored indicator set. Four additional Commodity & Inflation Stress indicators are included for analytical context but are excluded from the stress score — they measure preconditions and transmission mechanisms for recession rather than recession itself.
Leading Indicators
OECD Composite Leading Indicator
USALOLITOAASTSAM
OECD CLI Amplitude Adjusted for United States — long-term average = 100
CLI < 100 (below long-term trend)
CLI < 99 (recession-level slowdown)
What it measures
The OECD Composite Leading Indicator (CLI) for the United States is a monthly index designed to provide early signals of turning points in the U.S. business cycle — typically 6 to 9 months ahead. It aggregates seven component series selected for their leading relationship with GDP: housing starts, net new orders for durable goods, share prices, consumer confidence, weekly manufacturing hours, manufacturing industrial confidence, and the interest rate spread. The index is normalized so that its long-term average is always 100, representing trend-level economic activity.
Source
Organisation for Economic Co-operation and Development via FRED (USALOLITOAASTSAM). Monthly, seasonally adjusted, amplitude-adjusted form. Updated monthly with a short publication lag. Note: CLI readings are subject to revision each month due to the de-trending and smoothing filters applied in construction — current-month readings may shift slightly in subsequent releases.
Signal logic
The OECD defines four cyclical phases from the CLI: Expansion (above 100 and rising), Downturn (above 100 but falling), Slowdown (below 100 and falling), and Recovery (below 100 but rising). Yellow: CLI falls below 100, signaling that economic activity has moved below its long-term potential — entering the Downturn or Slowdown phase. Red: CLI falls below 99, indicating a meaningful deterioration below trend historically consistent with recession-level economic slowdown.
Threshold rationale
The OECD CLI replaced the discontinued Philadelphia Fed Leading Index (USSLIND) in this dashboard. It serves the same purpose — anticipating business cycle turning points 6–9 months in advance — with the advantage of being actively maintained and updated through the present. The 100 yellow threshold reflects the OECD's own four-phase framework: crossing below 100 marks the transition from expansion to potential downturn. The 99 red threshold captures the depth of decline historically observed at recession onset. Gyomai & Guidetti (2012), OECD System of Composite Leading Indicators; Astolfi et al. (2016), OECD Statistics Working Paper.
Duncan Leading Indicator
CFNAIMA3
Chicago Fed CFNAI 3-Month Moving Average — overall economic activity vs. trend
index < −0.35
< −0.70
What it measures
The Chicago Fed National Activity Index 3-Month Moving Average (CFNAIMA3) measures overall U.S. economic activity relative to its historical trend, aggregating 85 monthly economic indicators across four broad categories: production and income; employment, unemployment, and hours; personal consumption and housing; and sales, orders, and inventories. A value of zero indicates growth consistent with the historical average; positive values indicate above-trend growth; negative values indicate below-trend.
Source
Federal Reserve Bank of Chicago (CFNAIMA3). The 3-month moving average smooths the volatility of the single-month CFNAI. Used as a proxy for the Duncan Leading Indicator, which has a similar construction philosophy of aggregating broad economic activity into a single index.
Signal logic
Yellow: the 3-month average falls below −0.35, indicating broad economic activity is meaningfully below its historical trend. Red: the index falls below −0.70, indicating sustained and significant below-trend activity consistent with recession.
Threshold rationale
The Chicago Fed's own research establishes that CFNAIMA3 readings below −0.70 have historically been associated with recession periods, while readings between −0.35 and −0.70 indicate slowing but not yet recessionary conditions. These thresholds are published in the Chicago Fed's CFNAI technical documentation and are widely cited in the business cycle monitoring literature.
Equipment Orders
ADXTNO
Nondefense capital goods ex-aircraft — year-over-year % change
3 mos slowing YoY growth
YoY < 0%
What it measures
Tracks new orders for nondefense capital goods excluding aircraft — a proxy for business investment intentions. When firms order equipment, they signal confidence in future demand; declining orders signal investment retrenchment. Excludes defense and aircraft to reduce government-spending and lumpy large-order distortions.
Source
U.S. Census Bureau via FRED (ADXTNO). The chart displays the year-over-year percent change computed from monthly dollar-level data. Values represent growth relative to the same month one year prior, removing seasonal effects.
Signal logic
Yellow: three consecutive months of decelerating YoY growth rate (each month's growth lower than the prior month), signaling momentum loss even if growth is still positive. Red: YoY growth rate turns negative, meaning nominal orders are contracting relative to a year ago.
Threshold rationale
Business equipment investment is a forward-looking indicator — firms commit capital based on expected future conditions. Sustained deceleration signals reduced confidence; outright contraction (YoY < 0) has historically preceded recessionary conditions by 3–6 months. Equipment orders are a component of the Conference Board LEI and are tracked by NBER as part of its business cycle dating methodology.
Federal Funds Rate
DFEDTARU
FOMC upper target rate — direction signals monetary policy stance
active cutting cycle (rate lower than 12 months ago)
flat 6+ months (policy pause)
active hiking cycle (rate higher than 12 months ago)
What it measures
The Federal Funds Rate upper target range is set by the Federal Open Market Committee (FOMC) and represents the target for the overnight interbank lending rate. It is the primary instrument of U.S. monetary policy — the Fed raises rates to cool inflation and cuts rates to stimulate a weakening economy.
Source
Federal Reserve Board via FRED (DFEDTARU). Upper bound of the FOMC target range. No threshold lines are plotted because the signal is entirely directional — the level of the rate is less important than whether it is rising, flat, or falling.
Signal logic
Green: the current rate is lower than it was 12 months ago, indicating the Fed is in an active cutting cycle easing monetary conditions. Yellow: the rate has been held flat for 6 or more consecutive months and is not higher or lower than 12 months ago — indicating a policy pause that often precedes a pivot in either direction. Red: the current rate is higher than it was 12 months ago, indicating the Fed is in an active hiking cycle tightening monetary conditions.
Threshold rationale
The Fed's reaction function is well-established in the academic literature: rate hikes are a tightening headwind for growth and credit, while rate cuts are an accommodative tailwind. A cutting cycle signals the Fed sees sufficient downside risk to ease policy — historically a late-cycle or recession-adjacent signal, but also a supportive one. A hiking cycle signals the Fed is actively restraining growth to control inflation. Sources: Taylor (1993) rule; Bernanke & Blinder (1992); Fed policy normalization literature.
Housing Permits
PERMIT
Total privately-owned housing units authorized — year-over-year % change
YoY < 0%
YoY < −20%
What it measures
Total privately-owned housing units authorized by building permits — a leading indicator of residential construction activity, household formation trends, and confidence in future housing demand. Permits precede actual construction starts by 1–2 months and reflect developers' and homebuilders' forward expectations.
Source
U.S. Census Bureau and HUD via FRED (PERMIT). The chart displays the year-over-year percent change computed from monthly unit counts, removing seasonal effects inherent in construction activity.
Signal logic
Yellow: YoY permit growth turns negative, signaling weakening construction demand relative to the prior year. Red: YoY decline exceeds −20%, indicating a severe housing contraction consistent with recession-level demand destruction.
Threshold rationale
Housing leads the business cycle by 6–12 months and is one of the most reliable recession predictors. Leamer (2007, 'Housing IS the Business Cycle') demonstrates that residential investment contractions have preceded every post-WWII recession. A decline beyond −20% YoY has historically coincided with recession onset or imminent recession. Housing permits are one of the ten components of the Conference Board LEI.
ISM Manufacturing Index
GACDFSA066MSFRBPHI
Philly Fed General Activity diffusion index — 0-centered (ISM proxy)
index < 0 (contraction)
< −7 (deep contraction)
What it measures
The Philadelphia Fed Manufacturing Business Outlook Survey General Activity diffusion index measures the balance of manufacturers reporting improving versus deteriorating conditions. Positive readings indicate more firms are expanding than contracting; negative readings indicate the opposite. Used as a proxy for the ISM Manufacturing PMI.
Source
Federal Reserve Bank of Philadelphia via FRED (GACDFSA066MSFRBPHI). Proxy for ISM Manufacturing PMI — ISM data is not publicly available on FRED. The Philly Fed index is centered at 0 rather than ISM's 50, so the neutral/contraction boundary is 0, not 50.
Signal logic
Yellow: index falls below 0, indicating more manufacturers are contracting than expanding (equivalent to ISM below ~50). Red: index falls below −7, indicating deep contraction consistent with recession-level manufacturing activity (approximately ISM < 43).
Threshold rationale
Manufacturing PMI is a closely-watched leading/coincident indicator. Sustained readings below the neutral line signal broad industrial weakness. The −7 red threshold on the Philly Fed diffusion scale corresponds historically to ISM PMI readings below 43, which have preceded recession in the post-war era. Klein & Moore (1991), Conference Board LEI methodology.
Initial Jobless Claims
ICSA
Weekly initial unemployment insurance claims — most timely labor market read
> 350,000
> 450,000
What it measures
Weekly initial claims for unemployment insurance measure the number of workers filing for jobless benefits for the first time in a given week. This is the most timely available labor market indicator — published every Thursday with a one-week lag — reflecting the current pace of layoffs across the economy.
Source
U.S. Department of Labor via FRED (ICSA). Raw weekly count of initial claims. Seasonally adjusted. The 5-week signal window captures the most recent trend while filtering week-to-week noise.
Signal logic
Yellow: weekly claims exceed 350,000, signaling meaningful labor market deterioration above the expansion baseline. Red: weekly claims exceed 450,000, indicating recession-level layoff activity. The chart displays 5 years of weekly history for context.
Threshold rationale
Initial claims are one of the most reliable and timely recession signals available. Pre-COVID, sustained readings above 350K signaled a weakening labor market; above 450K has historically coincided with recession. These thresholds reflect pre-pandemic structural norms — the April 2020 spike to 6.9M was an exogenous shock with no parallel in the historical record and is treated separately. Claims are one of the ten components of the Conference Board LEI.
Average Weekly Manufacturing Hours
AWHMAN
Avg weekly hours worked in manufacturing — directional labor demand signal
YoY < 0%
YoY < −2%
What it measures
Average weekly hours worked in manufacturing measures how many hours per week manufacturing employees are working. It is one of the ten components of the Conference Board Leading Economic Index (LEI). When employers anticipate a slowdown, they reduce hours worked before laying off workers — making this a leading labor demand signal that typically turns before jobless claims spike and before nonfarm payrolls decline.
Source
Bureau of Labor Statistics via FRED (AWHMAN). Monthly, seasonally adjusted. One of the original Conference Board LEI components, published alongside the monthly Employment Situation report.
Signal logic
Signal is expressed as year-over-year % change to remove seasonal variation. Yellow: YoY change falls below 0%, indicating hours are contracting relative to a year ago — an early warning of employer caution. Red: YoY change falls below −2%, consistent with the magnitude of contraction historically observed during recessions.
Threshold rationale
Hours worked is a labor demand indicator that leads employment by 1–3 months. Employers adjust hours before headcount — trimming overtime first, then cutting to straight-time, before initiating layoffs. The Conference Board has included this series in its LEI since the index's inception (Burns & Mitchell, 1946). The −2% YoY red threshold is calibrated from recession-period behavior in the 1990, 2001, 2008, and 2020 cycles.
Manufacturing Shipments of Durable Goods
AMTMVS
3-month average month-over-month % change in durable goods shipments
3-mo avg MoM < 0%
< −1%
What it measures
Shipments of manufactured durable goods measure actual production output delivered to customers — the fulfillment side of the manufacturing economy. Durable goods (items expected to last 3+ years) include machinery, computers, vehicles, and fabricated metals, making this a broad measure of capital goods and consumer durables demand.
Source
U.S. Census Bureau via FRED (AMTMVS). The chart displays the 3-month rolling average of month-over-month percent changes — smoothing the considerable monthly volatility in this series while preserving timely trend information.
Signal logic
Yellow: the 3-month average MoM change falls below 0%, indicating shipments are contracting on a short-term trend basis. Red: the 3-month average falls below −1%, indicating a sustained pace of decline consistent with recession-level industrial contraction.
Threshold rationale
Durable goods shipments are one of NBER's coincident indicators for business cycle dating, specifically as a component of manufacturing and trade sales. A sustained 3-month average decline signals broad industrial contraction. The −1% red threshold reflects the typical pace of decline observed at recession onset in the post-2000 era.
Personal Income Less Transfers
W875RX1
Real personal income ex-transfers — month-over-month % change
1 month negative
3 consecutive months negative
What it measures
Real personal income excluding government transfer payments measures household earnings from wages, salaries, and investment income, adjusted for inflation and stripped of stimulus payments, unemployment benefits, and other transfers. This isolates the underlying earned-income health of the economy.
Source
Bureau of Economic Analysis via FRED (W875RX1). The chart displays the month-over-month percent change computed from chained 2017 dollar levels. Transfer payments (Social Security, Medicare, unemployment insurance, etc.) are excluded to avoid distortions from government support programs masking underlying weakness.
Signal logic
Yellow: any single month of negative MoM change, signaling earned income is contracting. Red: three consecutive months of negative MoM change, confirming that the decline is sustained rather than a statistical anomaly. The 0% line marks the cautionary boundary.
Threshold rationale
Real personal income less transfers is one of NBER's four primary coincident indicators used in official recession dating. The NBER Business Cycle Dating Committee explicitly references this series in its methodology. Three consecutive monthly declines have historically coincided with NBER-dated recession onset. BEA / NBER Business Cycle Dating Committee methodology (Hall et al., 2003).
S&P 500 Stock Price Index
SP500
Quarter-over-quarter % change using 21-day moving averages
QoQ < 0%
QoQ < −5%
What it measures
The S&P 500 tracks the equity performance of 500 large U.S. companies and serves as a broad measure of investor expectations about future corporate earnings and economic conditions. As a forward-looking asset price, equity markets typically lead the business cycle — peaking before recession and troughing before recovery.
Source
S&P Dow Jones Indices via FRED (SP500). The chart displays the quarter-over-quarter percent change using 21-day moving averages at each end (current vs. 63 trading days ago) to smooth daily volatility while preserving the quarterly trend signal.
Signal logic
Yellow: the QoQ moving-average return falls below 0%, indicating equity markets are pricing in deteriorating conditions. Red: the QoQ return falls below −5%, indicating significant market stress associated with recession expectations.
Threshold rationale
Equity markets are forward-looking and typically peak 6–9 months before recession. The S&P 500 is one of the ten components of the Conference Board LEI. A QoQ decline beyond −5% has historically been associated with recession onset or significant financial stress. Fama (1990) and Gordon (1962) establish the theoretical and empirical links between equity returns and economic activity.
Unemployment Gap
UNRATE
UNRATE minus CBO natural rate (NROU) — labor market tightness
gap < 0 pp
gap < −0.5 pp
What it measures
The unemployment gap measures the difference between the actual unemployment rate (UNRATE) and the Congressional Budget Office's estimate of the natural rate of unemployment (NROU) — the rate consistent with stable, non-accelerating inflation. A negative gap means the labor market is tighter than the economy can sustain without inflationary pressure.
Source
Bureau of Labor Statistics (UNRATE) and Congressional Budget Office via FRED (NROU). The plotted series is the computed difference: UNRATE minus NROU in percentage points. NROU is quarterly; values are interpolated to align with monthly UNRATE observations.
Signal logic
Yellow: the gap falls below 0 (actual unemployment below natural rate), indicating an overheated labor market. Red: the gap falls below −0.5 percentage points, indicating a significantly overheated labor market historically associated with late-cycle conditions and imminent Fed tightening.
Threshold rationale
When unemployment falls materially below the natural rate, the labor market is overheated — a late-cycle signal that historically precedes recession as the Fed tightens to control inflation. This is the empirical basis of the Friedman-Phelps natural rate hypothesis (1968) and the Phillips Curve framework. The CBO's NROU estimate is the standard benchmark used in Federal Reserve and academic research.
Yield Curve Inversion (10Y–2Y)
T10Y2Y
10-year minus 2-year Treasury spread — positive is normal, negative is inverted
spread < 0.20%
inverted in past 2 years
What it measures
The 10-year minus 2-year Treasury yield spread measures the slope of the yield curve. In normal conditions the curve slopes upward — investors demand higher yields for longer maturities. Inversion (negative spread) signals that short-term rates exceed long-term rates, reflecting market expectations of Fed rate cuts ahead — typically in response to anticipated economic weakness.
Source
Federal Reserve Board via FRED (T10Y2Y). Daily spread in percentage points, computed as the 10-year constant maturity Treasury yield minus the 2-year constant maturity Treasury yield.
Signal logic
Yellow: the spread narrows below 0.20%, signaling the curve is approaching inversion. Red: the curve has been inverted (negative) at any point in the past 2 years — the inversion signal persists because the recession typically follows the inversion by 6–18 months.
Threshold rationale
Yield curve inversion is one of the most empirically reliable recession predictors, with inversions preceding every U.S. recession since 1960 with a lead time of 6–18 months. The 2-year spread is considered the most informative maturity pair for recession forecasting. Key references: Estrella & Hardouvelis (1991), Estrella & Mishkin (1998), Harvey (1988). The 2-year window accounts for the long and variable lag between inversion and recession onset.
Recession Probability Indexes
High Yield Credit Spread
BAMLH0A0HYM2
ICE BofA US HY Option-Adjusted Spread — credit market stress proxy
> 4.0% (400 bps)
> 6.0% (600 bps)
What it measures
The ICE BofA US High Yield Option-Adjusted Spread (OAS) measures the additional yield investors demand to hold below-investment-grade (junk) corporate bonds over equivalent-duration Treasuries. It is the most widely-used proxy for credit market stress — widening spreads indicate investors are pricing in higher default risk and demanding greater compensation for credit and liquidity risk.
Source
ICE Data Indices, LLC via FRED (BAMLH0A0HYM2). FRED reports values in percentage points (e.g., 3.5 = 350 basis points). The series is not seasonally adjusted and reflects daily market pricing.
Signal logic
Yellow: spread exceeds 4.0% (400 bps), signaling elevated credit risk and tightening financial conditions. Red: spread exceeds 6.0% (600 bps), indicating significant financial stress historically associated with recession or credit crisis.
Threshold rationale
HY spreads are a real-time gauge of credit market health. Spreads above 400 bps signal elevated default risk pricing; above 600 bps have historically coincided with recession or financial crisis conditions. Gilchrist & Zakrajšek (2012) demonstrate that credit spreads — specifically excess bond premium — are leading indicators of economic activity with significant predictive power for GDP growth. Levels reference historical spread behavior across the 2001, 2008-09, and 2020 recession episodes.
Fed Board Short Yield Curve (10Y–3M)
T10Y3M
10-year minus 3-month Treasury spread — Fed Board preferred recession model input
spread < 0.5%
negative or inverted in past 2 yrs
What it measures
The 10-year minus 3-month Treasury yield spread captures the full slope of the yield curve from the shortest to the longest commonly traded maturities. It is the Federal Reserve Board's preferred yield curve measure for recession probability modeling because the 3-month bill rate most directly reflects current Fed policy, making the spread a cleaner signal of policy-driven distortions to the curve.
Source
Federal Reserve Board via FRED (T10Y3M). Daily spread in percentage points. The 3-month Treasury bill rate is set primarily by current Fed policy, making this spread a direct measure of how far policy rates depart from long-run growth expectations.
Signal logic
Yellow: spread narrows below 0.5%, signaling the curve is approaching the inversion threshold. Red: spread turns negative (inversion) or has been inverted at any point in the past 2 years, with the persistent red signal reflecting the long lag between inversion and recession.
Threshold rationale
Wright (2006) at the Federal Reserve Board demonstrated that the 10Y–3M spread outperforms the 10Y–2Y spread in out-of-sample recession probability models. The Fed's own recession probability model uses this spread as its primary input. This spread has inverted before every U.S. recession since 1960 without a false positive in-sample. The 0.50% cautionary threshold reflects the narrow-spread environment that typically precedes inversion.
NY Fed Yield Curve Proxy (10Y–3M Monthly)
T10Y3MM
Monthly 10Y–3M spread — input series to NY Fed recession probability model
spread < 0.5%
negative (inverted)
What it measures
The monthly average of the 10-year minus 3-month Treasury yield spread, used as the primary input to the New York Federal Reserve's widely-cited recession probability model. The monthly smoothing reduces daily noise and aligns with the model's publication cycle. The actual NY Fed probability output is published on the NY Fed website but is not available as a FRED series.
Source
Federal Reserve Board via FRED (T10Y3MM). Monthly average of the daily 10Y–3M spread. The NY Fed's actual recession probability output is not available on FRED; this series serves as the model's input and a direct proxy for the probability signal.
Signal logic
Yellow: monthly average spread falls below 0.5%, indicating the curve is narrowing toward inversion. Red: monthly average spread turns negative (inversion), consistent with elevated NY Fed model recession probabilities.
Threshold rationale
The New York Fed's recession probability model (Estrella & Mishkin, 1998) generates 12-month-ahead recession probabilities using the 10Y–3M spread. The model has been one of the most accurate institutional recession forecasting tools in the literature. When the spread is negative, the model typically generates probabilities exceeding 30%, historically considered a significant recession warning threshold.
St. Louis Fed Smoothed Recession Probability
RECPROUSM156N
Markov-switching model probability of recession — Chauvet & Piger
3 consecutive months > 20%
3 consecutive months > 80%
What it measures
The St. Louis Fed Smoothed Recession Probability generates a probabilistic estimate (0–100%) of the likelihood that the U.S. economy is currently in a recession regime, updated monthly. It uses a Markov-switching dynamic factor model applied to four coincident economic indicators: nonfarm payrolls, industrial production, real personal income less transfers, and real manufacturing and trade sales.
Source
Federal Reserve Bank of St. Louis, Marcelle Chauvet and Jeremy Piger via FRED (RECPROUSM156N). The 'smoothed' version applies retrospective smoothing to reduce false signals; it is available with a 1-month publication lag.
Signal logic
Yellow: three consecutive months above 20%, indicating a sustained buildup in recession probability beyond noise. Red: three consecutive months above 80%, the authors' own recommended threshold for a definitive recession signal.
Threshold rationale
Chauvet & Piger (2008, Journal of Business & Economic Statistics) developed the underlying Markov-switching model and established the 80% / 3-month threshold as the appropriate recession signal rule in their own publication. The 3-consecutive-month requirement for both thresholds prevents false signals from isolated monthly spikes — consistent with the authors' own FAQ guidance on using the index.
Coincident Indicators
Chicago Fed National Financial Conditions Index
NFCI
105-variable financial conditions index — 0 = historical average
index > 0
> 0.5
What it measures
The Chicago Fed National Financial Conditions Index (NFCI) aggregates 105 measures of financial activity across money markets, debt and equity markets, and the traditional and shadow banking systems into a single weekly index. It is constructed so that zero represents average financial conditions; positive values indicate tighter-than-average conditions (restrictive); negative values indicate looser-than-average conditions (accommodative).
Source
Federal Reserve Bank of Chicago via FRED (NFCI). Weekly index, released every Wednesday with a one-week lag. The index is standardized to have a mean of zero and unit variance over the full historical sample.
Signal logic
Yellow: index rises above 0, indicating financial conditions are tighter than the historical average, restricting credit access and economic activity. Red: index rises above 0.5, indicating significantly tight financial conditions associated with financial stress episodes.
Threshold rationale
Financial conditions indexes are important coincident recession indicators — tightening conditions restrict the credit channel and dampen investment and consumption. Hatzius et al. (2010) demonstrate that financial conditions indexes have significant predictive power for GDP growth. NFCI values above 0.5 have historically coincided with recession or significant economic slowdowns.
Consumer Spending (Real PCE)
PCECC96
Real personal consumption expenditures — month-over-month % change
1 month negative
3 consecutive months negative
What it measures
Real Personal Consumption Expenditures (PCE) measures inflation-adjusted consumer spending on goods and services — the largest component of U.S. GDP at approximately 70% of total output. As the primary engine of economic growth, sustained declines in consumer spending are a defining characteristic of recession.
Source
Bureau of Economic Analysis via FRED (PCECC96). Chained 2017 dollars, seasonally adjusted annual rate. The chart displays the month-over-month percent change computed from monthly levels, capturing the direction and pace of spending growth.
Signal logic
Yellow: any single month of negative MoM change, signaling a pullback in consumer spending. Red: three consecutive months of negative MoM change, confirming a sustained consumer spending contraction consistent with recession. The 0% line marks the cautionary boundary.
Threshold rationale
Real PCE is one of NBER's four primary coincident indicators used in official U.S. recession dating. The NBER Business Cycle Dating Committee explicitly references this series in its methodology (Hall et al., 2003). Three consecutive monthly declines have historically coincided with NBER-dated recession onset. The single-month yellow threshold provides an early-warning signal before the three-month confirmation.
Industrial Production
INDPRO
Total industrial output index — year-over-year % change
YoY < 0%
YoY < −2%
What it measures
Industrial Production measures the real output of the U.S. manufacturing, mining, and electric and gas utilities sectors. Although manufacturing comprises less than 20% of GDP, this indicator is closely watched because it is highly sensitive to business cycle turning points and reacts quickly to changes in demand conditions.
Source
Federal Reserve Board via FRED (INDPRO). Monthly index (2017=100), seasonally adjusted. The chart displays the year-over-year percent change computed from monthly levels, capturing the annual trend while eliminating seasonal distortions.
Signal logic
Yellow: YoY industrial production growth turns negative, indicating the goods-producing sector is contracting relative to a year ago. Red: YoY decline exceeds −2%, indicating recession-level industrial contraction.
Threshold rationale
Industrial production is one of NBER's four primary coincident recession indicators. YoY IP turning negative has preceded or coincided with the majority of post-1950 recessions (Advisor Perspectives / dshort analysis). The −2% red threshold captures the depth of decline typically observed at recession onset while filtering mild or transient contractions. Federal Reserve G.17 Industrial Production and Capacity Utilization report.
Nonfarm Payrolls
PAYEMS
Total nonfarm employment — year-over-year % change
YoY < 1%
YoY < 0%
What it measures
Total nonfarm payroll employment measures the number of U.S. workers on employer payrolls, excluding farm workers, private household employees, and the self-employed. It covers approximately 80% of workers who contribute to GDP and is the primary employment measure used by the NBER Business Cycle Dating Committee to identify recession start and end dates. The Chauvet-Piger smoothed recession probability model (also in this dashboard) is built directly on nonfarm payrolls as one of its four inputs.
Source
Bureau of Labor Statistics via FRED (PAYEMS). Monthly, seasonally adjusted. Released on the first Friday of each month in the Employment Situation report. Subject to significant revision — annual benchmark revisions can shift the picture materially.
Signal logic
Signal is expressed as year-over-year % change. Yellow: YoY growth falls below 1%, indicating a sharp deceleration in hiring that has historically preceded recessions by 3–9 months. Red: YoY change falls below 0%, meaning the economy has fewer jobs than a year ago — a condition that has accompanied every post-WWII recession.
Threshold rationale
YoY% is preferred over MoM because payrolls are highly volatile month-to-month and subject to revision. A sub-1% YoY reading has preceded every NBER recession since 1970 with a typical lead of 3–6 months. The 0% threshold aligns with NBER criteria: sustained payroll decline is the clearest single employment-based recession signal. Stock & Watson (2002); Chauvet & Piger (2008).
St. Louis Fed Financial Stress Index
STLFSI4
18-variable financial stress index — 0 = normal conditions
index > 0
> 1.5
What it measures
The St. Louis Fed Financial Stress Index measures the degree of stress in U.S. financial markets, constructed from 18 weekly data series including interest rates, yield spreads, and other financial indicators. It is designed to capture disruptions to the normal functioning of financial markets. Zero indicates average financial market conditions; positive values indicate above-average stress.
Source
Federal Reserve Bank of St. Louis via FRED (STLFSI4). Weekly index, released every Friday. Version 4 uses the most recent methodological update. Complements the Chicago Fed NFCI with a focus on financial market stress rather than broader conditions.
Signal logic
Yellow: index rises above 0, indicating above-average financial market stress. Red: index rises above 1.5, indicating high financial stress associated with systemic risk or market dislocations.
Threshold rationale
The STLFSI is constructed so zero represents average conditions. Readings above 1.5 have historically coincided with financial crises or severe market dislocations — the 2008 financial crisis peaked above 5.0, while the COVID shock briefly exceeded 8.0. Kliesen & Smith (2010) at the St. Louis Fed developed the underlying methodology and document the index's behavior around historical stress episodes.
University of Michigan Consumer Sentiment
UMCSENT
Consumer sentiment index — baseline 100 = Q1 1966 average
index < 80
< 70
What it measures
The University of Michigan Consumer Sentiment Index measures consumer attitudes toward personal finances, business conditions, and buying conditions through approximately 50 core survey questions administered monthly to ~1,000 U.S. households. It is a leading indicator of household spending decisions — pessimistic consumers reduce discretionary spending, amplifying economic slowdowns.
Source
University of Michigan Surveys of Consumers via FRED (UMCSENT). Monthly index; baseline 100 = Q1 1966 average. Not seasonally adjusted. Published mid-month (preliminary) and end-of-month (final). FRED data is delayed by one month at the source's request.
Signal logic
Yellow: index falls below 80, indicating meaningful deterioration in consumer confidence below the long-run expansion range. Red: index falls below 70, indicating severe consumer pessimism historically associated with recession.
Threshold rationale
The index normalizes to 100 at its 1966 baseline; readings in healthy expansions typically range 85–105. Readings below 80 have historically signaled consumer caution and preceded spending slowdowns; readings below 70 have coincided with every post-1978 recession. Katona (1968); Carroll, Fuhrer & Wilcox (1994). Important caveat: post-pandemic inflation pushed readings below 70 in 2022–23 without a formal NBER recession, reflecting the unusual conditions of supply-shock-driven inflation with a still-strong labor market.
Lagging Indicators
Credit Card Delinquency Rate
DRCCLACBS
% of credit card loans 30+ days delinquent — consumer credit stress
rate > 3.0%
rate > 4.5%
What it measures
The credit card delinquency rate measures the percentage of credit card loan balances at all commercial banks that are 30 or more days past due. It captures consumer financial stress that is not visible in employment or sentiment data — households under pressure begin missing payments before they lose jobs or stop spending. It serves as a lagging-to-coincident consumer balance sheet stress indicator and complements the income-based personal consumption and Sahm Rule signals in this dashboard.
Source
Federal Reserve Board via FRED (DRCCLACBS). Quarterly, not seasonally adjusted. Covers all commercial banks. Released with approximately a 6-week lag after quarter-end. The quarterly frequency means the card updates only 4 times per year.
Signal logic
Yellow: delinquency rate exceeds 3.0%, above the post-GFC normalized baseline, indicating elevated consumer credit stress. Red: rate exceeds 4.5%, the level historically associated with recession-period consumer distress. The rate peaked at approximately 6.8% during the Great Recession (Q3 2009).
Threshold rationale
Federal Reserve research (Barnes et al., 2025) confirms credit card delinquency rates as a recession-adjacent stress signal driven by rising interest rates, job loss, and overleveraging. The St. Louis Fed (2025) noted the current share of credit card debt in delinquency is approaching Great Financial Crisis levels. The 3.0% yellow and 4.5% red thresholds are calibrated from the post-GFC baseline (2011–2019 average: ~2.5%) and the onset of prior recession-period delinquency spikes. DRCCLACBS; Federal Reserve Charge-Off and Delinquency Rates release.
Unemployment Rate
UNRATE
Direction only — yellow: any 1-month rise | red: 3 consecutive months without a decrease
1 month increase
3 consecutive non-declining months
What it measures
Tracks the direction of change in the monthly unemployment rate — the most widely-recognized labor market measure. As a lagging indicator, the unemployment rate typically peaks after the recession has already begun, confirming deterioration rather than predicting it. Its value is in confirming that a recession is underway when leading indicators have already signaled warning.
Source
Bureau of Labor Statistics via FRED (UNRATE). Monthly, seasonally adjusted. Note: no threshold lines are plotted because the signal is directional — any level of unemployment can be recessionary if it is rising.
Signal logic
Green: the unemployment rate is declining month-over-month, signaling an improving labor market. Yellow: the unemployment rate rises for 1 month, signaling initial labor market weakening. Red: the unemployment rate posts 3 consecutive months without a decrease and the net change is positive, confirming a sustained deterioration in the labor market consistent with recession.
Threshold rationale
The unemployment rate is a classic lagging indicator — it typically peaks 1–3 quarters after recession onset and troughs 1–2 quarters after recovery begins. Three consecutive non-declining months with a net upward move provide a confirmation threshold that filters single-month noise while still flagging genuine labor market deterioration. The green segment highlights falling unemployment periods as the healthy-expansion baseline. Bureau of Labor Statistics, Current Population Survey.
GDP Growth Rate
A191RL1Q225SBEA
Real GDP quarterly annualized growth rate — broadest economic output measure
1 quarter negative
2+ consecutive quarters negative
What it measures
Real GDP growth measures the inflation-adjusted quarterly change in total U.S. economic output — the broadest single measure of economic activity. As a lagging indicator reported with a 1-quarter delay and subject to significant revision, GDP confirms economic conditions rather than predicting them.
Source
Bureau of Economic Analysis via FRED (A191RL1Q225SBEA). Quarterly, seasonally adjusted annual rate, percent change. Subject to three rounds of revision (advance, second, third estimate) before final benchmarking.
Signal logic
Yellow: one quarter of negative real GDP growth — technically called a 'contraction.' Red: two or more consecutive quarters of negative real GDP growth — the informal 'technical recession' rule. The 0% line marks the growth/contraction boundary.
Threshold rationale
Two consecutive quarters of negative real GDP growth is the most widely-cited informal recession rule in financial markets and media, originating from the work of Julius Shiskin at the BLS (1974). Note: NBER does not rely solely on this rule — it considers breadth and depth alongside duration, which is why some NBER-dated recessions do not meet the technical definition (e.g., 2001) and why some two-quarter contractions are not officially dated as recessions.
Sahm Rule Recession Indicator
SAHMREALTIME
3-month avg unemployment vs. 12-month low — real-time recession trigger
≥ 0.2 pp
≥ 0.5 pp
What it measures
The Sahm Rule Recession Indicator measures the difference between the current 3-month average unemployment rate and the minimum 3-month average unemployment rate over the prior 12 months. It is designed to trigger at or near the official start of recession in real time — without waiting for the NBER's typically delayed recession dating announcement.
Source
Claudia Sahm / Federal Reserve Board via FRED (SAHMREALTIME). Monthly, in percentage points. The 'realtime' version uses data as it was available at each publication date, making it appropriate for real-time recession monitoring.
Signal logic
Yellow: indicator reaches 0.2 percentage points, providing an early warning before the formal signal triggers. Red: indicator reaches 0.5 percentage points — the original Sahm Rule threshold that has historically triggered at or just after the NBER-dated recession start.
Threshold rationale
Sahm (2019) developed this rule at the Federal Reserve Board. A reading of 0.5 pp has historically triggered at or immediately after the start of every U.S. recession since 1970 with no false positives in-sample. The rule is designed as a near-real-time trigger for automatic fiscal stabilizer policy. Important caveat: Claudia Sahm herself has noted the indicator may have been temporarily distorted by post-pandemic labor supply normalization — the 2024 breach of 0.5 did not produce a confirmed NBER recession.
Commodity & Inflation Stress
ⓘ Context-only indicators — not included in the composite stress score.
These four indicators measure the preconditions and transmission mechanisms that cause recession
rather than recession itself. Elevated commodity prices and inflation force the Fed tightening
that historically causes recession, but they can also coexist with strong growth for extended periods.
Use this panel as supplementary context alongside the scored leading, coincident, and lagging indicators.
WTI Crude Oil Price
DCOILWTICO
Spot price $/bbl — signal is % above/below 12-month average
within ±20% of 12-month avg
20–50% above
50%+ above (supply shock)
What it measures
West Texas Intermediate (WTI) crude oil is the U.S. benchmark crude price, traded on the NYMEX futures exchange. It is the primary input cost benchmark for transportation, manufacturing, agriculture, and petrochemicals — affecting both producer costs and consumer prices across the entire economy. Oil price spikes have been a direct cause of recession on multiple occasions in U.S. history, making it one of the most consequential external risk factors in business cycle analysis.
Source
U.S. Energy Information Administration via FRED (DCOILWTICO). Daily spot price in dollars per barrel, not seasonally adjusted. Available from 1986 to present. The signal is computed as the percentage deviation of the current price from its trailing 12-month (260 trading-day) average.
Signal logic
Signal measures the current price as a percentage above or below the trailing 12-month average rather than an absolute level — because the same price can be recessionary in one context and benign in another. Green: within ±20% of the 12-month average (stable environment). Yellow: 20–50% above the average (notable cost pressure building). Red: 50%+ above the average — the historical threshold associated with supply-shock recessions in 1973-75, 1980, 1990-91, and 2008.
Threshold rationale
Context-only indicator — not included in the composite stress score. Oil price spikes have preceded four of the last eight recessions (1973-75, 1980, 1990-91, 2008) but have also occurred without causing recession (2005, 2011, 2022). The U.S. economy is significantly less oil-intensive than in the 1970s, reducing but not eliminating oil's recession transmission mechanism. This indicator is most informative when elevated simultaneously with deteriorating leading indicators and tightening financial conditions. Hamilton (1983, 2009) established the empirical link between oil price shocks and U.S. recessions. The relative signal methodology follows Killian (2008).
Copper Price (Dr. Copper)
PCOPPUSDM
Monthly copper price — YoY % change as industrial demand barometer
YoY > 0%
0% to −10% (softening)
< −10% (contracting)
What it measures
Copper is the most widely-used industrial metal in the world — essential to construction, manufacturing, electronics, and electrical infrastructure. Its price is driven almost entirely by global industrial demand rather than supply constraints, earning it the nickname 'Dr. Copper' for its ability to diagnose the health of the global economy. Unlike oil, copper has no supply-shock dynamic — price declines reliably reflect genuine demand weakness rather than geopolitical disruptions.
Source
International Monetary Fund via FRED (PCOPPUSDM). Monthly average spot price in U.S. dollars per metric ton. The chart displays the year-over-year percent change, which removes seasonal patterns and aligns with the signal logic.
Signal logic
Signal is expressed as year-over-year percent change. Green: YoY positive — industrial demand is expanding. Yellow: YoY between 0% and −10% — demand is softening, consistent with slowing but not yet recessionary conditions. Red: YoY below −10% — industrial demand is contracting at a pace historically associated with recession-level global economic slowdown.
Threshold rationale
Context-only indicator — not included in the composite stress score. Copper fell 15–30% YoY before the 2001 and 2008-09 recessions, and has historically led industrial production turning points by 1–3 months. Unlike oil, copper false positives are rare — sustained YoY declines beyond −10% have almost always coincided with or preceded recession. However, copper is a global indicator and can be distorted by China-specific demand cycles. Most informative when paired with domestic leading indicators showing similar deterioration. Brunner (2002) and subsequent commodity economics literature document copper's leading indicator properties.
PPI All Commodities
PPIACO
Producer Price Index — YoY % change as broad upstream cost pressure gauge
YoY < 5%
5–15% (elevated cost pressure)
> 15% (historical shock)
What it measures
The Producer Price Index for All Commodities measures the average change in prices received by domestic producers for all commodities across agriculture, energy, metals, and other raw materials. It serves as the broadest available gauge of upstream cost pressure — the inflationary force that squeezes producer margins, feeds through to consumer prices, and ultimately triggers the Federal Reserve tightening cycles that have historically caused recession. Available from 1913, this series spans over a century of U.S. business cycles including the Great Depression and both World Wars.
Source
Bureau of Labor Statistics via FRED (PPIACO). Monthly index, not seasonally adjusted, 1982=100. The chart displays the year-over-year percent change to remove seasonal effects and express the signal in a consistent comparative format.
Signal logic
Green: YoY below 5% — input costs are within normal historical bounds, not creating significant inflationary or margin pressure. Yellow: YoY 5–15% — elevated cost pressure likely causing the Fed to maintain restrictive policy or tighten further. Red: YoY above 15% — historical shock territory associated with major commodity-driven inflation episodes that preceded recession in 1973-75, 1980, and contributed to tightening in 2022.
Threshold rationale
Context-only indicator — not included in the composite stress score. Sustained high PPI compresses business margins, raises consumer prices, and forces Fed tightening — the classic cost-push inflation transmission mechanism for recession. However, elevated PPI can coexist with strong growth for extended periods before the tightening response materializes. The indicator is most informative when combined with an already-rising Fed Funds Rate, confirming the policy response is underway. The 15% red threshold captures the magnitude of commodity price inflation observed before the 1973-75 and 1980 recessions. Barsky & Kilian (2002) document the oil-price / commodity inflation / recession transmission mechanism.
Core PCE Inflation
PCEPILFE
PCE ex-food & energy — YoY % vs. Fed 2% target (primary Fed inflation gauge)
YoY < 2.5%
2.5–4.0% (above target)
> 4.0% (aggressive tightening trigger)
What it measures
The Personal Consumption Expenditures Price Index excluding food and energy (Core PCE) is the Federal Reserve's preferred inflation measure and the primary benchmark for its 2% price stability mandate. By excluding volatile food and energy prices, Core PCE isolates the underlying inflation trend that the Fed can most directly influence through monetary policy. It is what the FOMC actually watches, discusses, and reacts to — making it the most direct gauge of the inflationary pressure driving Fed policy decisions.
Source
Bureau of Economic Analysis via FRED (PCEPILFE). Monthly index, seasonally adjusted, chained 2017 dollars. The chart displays the year-over-year percent change — the standard format used in all FOMC communications and the Federal Reserve's Summary of Economic Projections (SEP).
Signal logic
Green: YoY below 2.5% — Core PCE is at or near the Fed's 2% target, consistent with neutral or accommodative policy. Yellow: YoY 2.5–4.0% — meaningfully above target; the Fed is likely maintaining a restrictive stance or actively tightening, creating headwinds for growth and credit. Red: YoY above 4.0% — the threshold historically associated with aggressive tightening cycles (1979-80, 1994, 2022) that have materially raised recession risk.
Threshold rationale
Context-only indicator — not included in the composite stress score. Elevated Core PCE is a precondition indicator, not a recession indicator directly. High Core PCE forces the Fed tightening response that causes recession — but the Fed has achieved soft landings (1994-95, potentially 2022-24) where inflation was controlled without recession. This indicator is most dangerous in combination with a rising Fed Funds Rate (confirming the tightening is underway) and deteriorating leading indicators (confirming the economy is weakening under the tightening pressure). The Fed's 2% target was formalized in the FOMC's Statement on Longer-Run Goals (2012). Bernanke (2004) and Clarida, Gali & Gertler (1999) document the Fed's reaction function to Core PCE deviations.