This is the daily update for today, March 2, 2026.
One word that discribes the US economy:
Overall, the data present a mixed but cautionary picture: several real-economy indicators have softened meaningfully while financial-stress and model-based recession probabilities remain low. Demand-side metrics — real personal income growth has fallen to near zero (0.2% YoY in Dec 2025), real retail sales turned negative in Dec 2025, total vehicle sales are down roughly 5% YoY in late 2025/Jan 2026, and housing permits remain well into negative territory — all signal weakening household spending and housing activity. Broad monetary and liquidity gauges (M2 growth ~4.3% YoY) are below the 5% rule-of-thumb warning level, and the 10yr–3mo spread has narrowed to roughly +0.3–0.4 percentage points, which is inside the “warning” zone (below 1.0) even though it is not inverted below zero. By contrast, measures of financial stress are subdued (Chicago/St. Louis/Kansas City indexes negative), industrial production and several categories of manufacturing orders are holding up, and headline model-based Smoothed U.S. Recession Probabilities are very low (sub‑1%), indicating markets and models do not currently price in a near-term recession.
Putting these pieces together, the near-term probability of a recession is elevated relative to a fully expansionary backdrop but remains far from imminent or high-probability. The softening in incomes, retail demand, vehicle sales, and housing increases downside risk and warrants close monitoring; yet continued payroll gains (e.g., +130k nonfarm jobs in Jan 2026) and low financial-stress readings provide important offsets. In plain terms: the economy shows signs of deceleration that could tip into contraction if weakness broadens or labor-market indicators deteriorate further, but current financial conditions and probability models suggest a slowdown is more likely than an immediate recession. Key near-term signals to watch for a meaningful rise in recession risk are sustained job losses, a further fall in real incomes and retail activity, deeper and persistent inversion of the yield curve, or a jump in model-based recession probabilities.
Text written with ChatGPT from OpenAI.