No single recession indicator is pointing to a US recession as of October 2026. The 10-year minus 3-month Treasury spread was +0.99 points on October 9, 2026, the real-time Sahm rule read 0.00 for September 2026, against a 0.50 trigger, and weekly jobless claims were 197,000 [1][2][5]. The softer signals are the Conference Board's Leading Economic Index (LEI), down 0.1% over the six months to August 2026, and slow hiring [7][10]. Recessions are declared after the fact by the National Bureau of Economic Research (NBER), whose latest one ran from February to April 2020 [3].
What counts as a recession?
The NBER's Business Cycle Dating Committee defines a recession as "a significant decline in economic activity that is spread across the economy" and lasts more than a few months [3]. It weighs three criteria, depth, diffusion and duration, and a very strong signal on one can make up for a weaker one on another [3].
The committee looks at monthly measures such as real personal income less government transfers, nonfarm payroll employment, household employment, real consumer spending, real manufacturing and trade sales and industrial production, and it puts the most weight on the first two [3]. It does not apply a fixed rule such as two quarters of falling GDP, and it names peaks and troughs only some months after they happen [3]. That lag is why investors and economists watch indicators that move earlier.
What does the yield curve say?
The yield curve compares interest rates on short- and long-term Treasury debt. Normally long rates are higher. When short rates rise above long rates, the curve is "inverted," which has often meant markets expect the Federal Reserve to cut rates in a weaker economy.
The San Francisco Fed found that every US recession from 1955 to 2018 was preceded by an inversion, with only one false signal, in the mid-1960s, and a delay of 6 to 24 months between inversion and recession [4]. That study used the 10-year minus 1-year spread; markets also follow the 10-year minus 3-month and 10-year minus 2-year spreads.
The latest inversion did not end in a recession, at least as of October 2026. At month-end, the 10-year minus 2-year spread was negative from July 2022 to July 2024, and the 10-year minus 3-month spread from October 2022 to November 2024 [1]. The NBER has not dated any recession after April 2020 [3]. Both spreads are now positive: on October 9, 2026, the 10-year yield was 5.24%, the 2-year 4.80% and the 3-month 4.25%, giving spreads of +0.44 and +0.99 points [1].
What is the Sahm rule, and what does it show?
The Sahm rule, named for economist Claudia Sahm, signals a recession when the three-month average of the unemployment rate rises 0.50 points or more above its lowest three-month average of the previous 12 months [5]. It is built to catch the early, fast rise in unemployment that has marked past recessions.
The September 2026 reading was 0.00 [5]. The check is simple: unemployment was 4.1% in July and August 2026 and 4.2% in September, a three-month average of 4.13%, equal to the lowest average of the prior year [2][6].
The 2025 shutdown gap
There is no unemployment rate for October 2025, because household survey data were not collected during the federal government shutdown, so the Sahm series also has no October 2025 value [11][5]. DataPorium's unemployment series also lacks October 2025 to May 2026; for those months the official rate ranged from 4.3% to 4.5%, peaking in November 2025 [2][6]. The Sahm reading reached 0.43 that month, below the trigger, and fell steadily through 2026 [5].
The rule is not perfect. It crossed the trigger in July 2024, at 0.53, and no recession followed [5][3].
What do jobless claims, the LEI and the ISM say?
Initial jobless claims
Initial claims count people filing for unemployment benefits for the first time each week, so they are among the fastest labor-market readings. Claims were 197,000 in the week ending October 3, 2026, compared with 235,000 a year earlier and a 2025 high of 264,000 in the week ending September 6, 2025 [2]. A sustained rise would be the warning sign; the 2026 trend is the opposite.
Conference Board Leading Economic Index
The LEI combines ten forward-looking series, including the yield spread, stock prices, building permits, new orders and jobless claims. In its September 18, 2026 release, the Conference Board reported that the LEI fell 0.1% in August to 99.5 (2016=100), and that its six-month change turned slightly negative at -0.1%, "suggesting a less certain economic environment ahead" [7]. It also said the economy is still expanding and forecast 1.9% real GDP growth for 2026 [7]. The index has drifted lower since 2022 without a recession following [7].
ISM Manufacturing PMI
The Institute for Supply Management's Manufacturing PMI is a survey of purchasing managers. Readings above 50% mean manufacturing is expanding; above 47.5% over time generally indicates the overall economy is expanding [8]. It was 54.5% in September 2026, the ninth straight month of expansion after ten months of contraction, though its prices index jumped to 77.9% [8].
What are smoothed recession probabilities?
Smoothed recession probabilities, published by the St. Louis Fed, come from a statistical model by Marcelle Chauvet and Jeremy Piger that reads four coincident indicators: payrolls, industrial production, real personal income excluding transfers and real manufacturing and trade sales [9]. It estimates the chance that the economy is in a recession now, not in the future.
The reading was 0.62% for August 2026, up from 0.10% in June but far from recession levels [2][9]. In past recessions it went to 100%, in December 2008 and in March and April 2020 [9]. The series is revised as data change: DataPorium's earlier stored values for mid-2025 differ slightly from FRED's current ones.
How have these indicators performed?
| Indicator | Latest reading | Recession signal | Recent false alarm |
|---|---|---|---|
| 10-year minus 3-month spread | +0.99 pts (October 9, 2026) | Below zero | Negative October 2022 to November 2024; no recession |
| 10-year minus 2-year spread | +0.44 pts (October 9, 2026) | Below zero | Negative July 2022 to July 2024; no recession |
| Sahm rule (real time) | 0.00 (September 2026) | 0.50 or higher | 0.53 in July 2024; no recession |
| Initial jobless claims | 197,000 (week ending October 3, 2026) | Sustained rise | None in this period |
| Conference Board LEI | 99.5, -0.1% over six months (August 2026) | Persistent decline | Declined after 2022; no recession |
| ISM Manufacturing PMI | 54.5% (September 2026) | Below 47.5% over time | Below 50% for ten months before 2026; no recession |
| Smoothed recession probability | 0.62% (August 2026) | Near 100% in past recessions | None in this period |
Source: DataPorium Interest Rates and Economic Indicators [1][2]; FRED [5][9]; Conference Board [7]; ISM [8]; NBER [3]. Yield-curve periods use month-end values.
Hiring is the main soft spot. Nonfarm payrolls rose by 496,000 in the 12 months to September 2026, to 159.0 million, and by 29,000 in September alone [10][2]. Slow job growth with low layoffs keeps the Sahm rule and claims calm, while the LEI reflects weaker expectations.
As of October 2026, the yield curve is positive, the Sahm rule is at 0.00 and claims are under 200,000; the LEI and slow hiring are the softer signals.
The latest readings of the yield curve and the labor data are on DataPorium's interest rates page and economic indicators page [1][2].
Key takeaways
- The NBER defines recessions by depth, diffusion and duration; its latest recession ran from February to April 2020 [3].
- The 10-year minus 3-month spread was +0.99 points on October 9, 2026, after an inversion from 2022 to 2024 that did not end in recession [1][3].
- The real-time Sahm rule read 0.00 in September 2026; it falsely crossed 0.50 in July 2024 [5].
- Jobless claims were 197,000 in the week ending October 3, 2026, and the ISM PMI was 54.5% in September [2][8].
- The smoothed recession probability was 0.62% for August 2026, against 100% in past recessions [9].
Frequently asked questions
Is the US in a recession in 2026?
The NBER has not declared one; its last recession ended in April 2020 [3]. As of October 2026, the main real-time indicators, such as the Sahm rule at 0.00 and a 0.62% smoothed recession probability, do not show one [5][9].
What is the Sahm rule?
It flags a recession when the three-month average unemployment rate rises 0.50 points above its low of the previous 12 months. It read 0.00 in September 2026 [5].
Does an inverted yield curve always mean a recession?
No. It preceded every recession from 1955 to 2018 with one false signal, but the 2022-2024 inversion has not been followed by an NBER recession as of October 2026 [3][4].
What is the best recession indicator?
None works alone. The yield curve leads by 6 to 24 months but has false alarms, while labor indicators such as the Sahm rule and jobless claims react faster once a downturn starts [4][5].
Sources & References
- [1] DataPorium Interest Rates (US Treasury yield curve and spreads)
- [2] DataPorium Economic Indicators (unemployment rate, payrolls, initial claims, smoothed recession probabilities)
- [3] National Bureau of Economic Research, Business Cycle Dating (accessed October 13, 2026)
- [4] Federal Reserve Bank of San Francisco, Economic Forecasts with the Yield Curve, Economic Letter 2018-07 (March 5, 2018)
- [5] Federal Reserve Bank of St. Louis, FRED, Real-time Sahm Rule Recession Indicator (updated October 2, 2026)
- [6] Federal Reserve Bank of St. Louis, FRED, Unemployment Rate (updated October 2, 2026)
- [7] The Conference Board, US Leading Economic Index press release (September 18, 2026)
- [8] Institute for Supply Management, Manufacturing PMI Report, September 2026
- [9] Federal Reserve Bank of St. Louis, FRED, Smoothed U.S. Recession Probabilities (updated October 1, 2026)
- [10] Federal Reserve Bank of St. Louis, FRED, All Employees, Total Nonfarm (updated October 2, 2026)
- [11] U.S. Bureau of Labor Statistics, The Employment Situation - November 2025 (December 16, 2025)