by Dejan Pekic
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
The AI productivity revolution has a new poster child. Matthew Gallagher’s AI-powered company, Medvi, a telehealth provider of GLP-1 weight-loss drugs, last year reported annual revenue of US$401 million. This year the company is on track to reach $1.8 billion in sales. And the real surprise? Gallagher’s only employee is his younger brother Elliot. It’s
With the current RBA decisions affecting so many homeowners and property investors, we’re often asked whether it’s best to pay down debt or invest during high interest rates. The simple answer? There is no single best-fit solution. Your decision should take into account factors such as your financial position, investment strategy, risk profile and tax
The Federal Government last night handed down its 2026 Budget, with the largest reforms since the Howard era. With the Iraq war and ongoing fuel crisis causing uncertainty across markets and a focus on ‘intergenerational fairness’, there are some key changes for investors. The Budget, if it moves forward into legislation, will see scaled-back tax
