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.
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