February 20, 2026

An Update on US Recession Indicators

An Update on US Recession Indicators

Early last year, we flagged research that pointed to a probable recession in the United States in 2025. While there was plenty of turmoil last year, particularly after Trump announced stinging global trade tariffs, the economy remained resilient. The lack of follow-through on the proposed tariffs, in combination with a steady labour market and strong

by Dejan Pekic

20

February 2026

An Update on US Recession Indicators

Posted by Dejan Pekic

Early last year, we flagged research that pointed to a probable recession in the United States in 2025. While there was plenty of turmoil last year, particularly after Trump announced stinging global trade tariffs, the economy remained resilient. The lack of follow-through on the proposed tariffs, in combination with a steady labour market and strong corporate performance, particularly in the AI sector, helped fend off any recession.

So what does the picture look like for 2026?

There are 12 variables that can point to the likelihood of a recession. As of January 2026, these consumer, business activity and financial variables are suggesting the US economy remains in a state of expansion, at least for the first half of 2026.

According to the ClearBridge Investments Recession Risk Dashboard, there is a solid overall expansionary green signal (suggesting immediate growth). While most indicators remained stable from December to January, there was improvement in the ISM New Orders indicator, which marks new manufacturing activity. That, in combination with OBBB tax-refund fiscal tailwinds (the OBBB was introduced into US law in July 2025, with tax cuts designed to boost US consumer spending), is helping ward off a significant downturn.

It is important to remember, however, that we remain in a bull market. While US stocks have rebounded from last year’s volatility to hit new highs already this year, policy and global shifts may impact that position, and a correction will occur at some stage.

We can’t predict the exact timing, severity or length of the next recession in the US or in Australia, but a recession will affect asset prices when it happens. Downturns may cause panic, but they also provide a prime opportunity for investors, helping you acquire quality assets at discounted prices.

Click for US Recession Risk Indicators.

At Newealth, we stay on top of key financial trends to help you make informed financial decisions. For strategic investment advice, we’re here for a confidential discussion.

 

General Advice Warning:

The information in this blog is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider whether the information is appropriate for you and seek professional advice before making any financial decisions.
Newealth Pty Ltd ABN 61 091 100 275 | AFSL 231297

Related Posts

  • Families Moving Overseas for Debt-Free Living

    A young Aussie family sold up and moved to Tuscany. Here's what their story reveals about the housing market.

    Published On: August 13th, 2026By

  • Housing Market & Affordability: What’s Really Happening

    While the RBA held the cash rate at 4.35% in June, three successive rises earlier in the year – in tandem with major changes to CGT and negative gearing – continue to influence the property market. What you may be seeing are headlines around reducing borrowing power and falling property values. The situation is a little

    Published On: August 7th, 2026By

  • JPMorgan Guide to the Markets Australia

    According to JPMorgan’s ‘Annual equity returns and intra-year declines’ data released on 30 June, the average ASX 200 intra-year drop over the past 32 years was 13.8% (median 11.5%). While that might seem alarming, what is interesting is what happens afterwards. Despite that recurring mid-year drop, the ASX 200 has still finished the calendar year

    Published On: July 24th, 2026By

Sign Up

Sign up to receive clear insights on market trends, along with practical financial, investment and lifestyle guidance to help you make confident decisions.

Newealth helps professionals, executives and families plan, invest and protect their long-term financial future.

The CFP® Certification Program is the highest designation in financial planning worldwide. It comes coupled with commitment to the highest ethical standards and sets CFP® professionals apart from the rest.

Address
Level 10, 276 Pitt Street
Sydney NSW 2000
P: +61 2 9267 2322

General Advice Warning: The information contained on this web site is general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser.
Go to Top