I had not updated this one in a while, but the NY Fed's "Probability Of A Recession In The Next 12 Months" model pegs the odds of a nasty downturn at 60% (teal line on this chart). At first glance, that does not sound insurmountable, but when you look at the 40-odd year history it rarely gets above 50%, so this is still a concerning reading. This indicator gets a lot of press every now and then but it is not a very robust framework, as it only uses one input: the yield curve.
An alternative that also fits in the "recession/risk" category is to look at the state of housing sentiment. It's the blue line on the chart and an overall measure of how households feel about things. If we apply the same framework as the NY Fed's indicator and throw it into a probit model it pegs the odds at nearly 100% ... which seems a little ridiculous. That said, the series that go into housing sentiment sit near all-time lows, so it is at least consistent.
Housing is an early-cycle industry so it is not completely crazy to think that it would flag recession/risk earlier than other indicators, including the yield curve. Irrespective on which side of the tariff debate one sits, both of these indicators flag recession risk at this time. We will get a few more pieces of the puzzle this week with the release of the PMIs and payrolls for April. We shall see. Happy Sunday. FT