What does 4.4% mean for me?

The number

4.4% is the chance that a US recession begins within the next 12 months: roughly 1 in 23. Put another way, out of 100 situations that looked like today's, about 4 would see a recession start within a year. Today that counts as low.

Two market signals set this number, and both read calm: the yield curve is positive (the 10-year Treasury yield is 1.08 points above the 3-month bill); the excess bond premium, the extra yield lenders demand beyond expected defaults, is −0.29, below its long-run average: lenders are relaxed.

What counts as a recession

A recession here is a downturn dated by the National Bureau of Economic Research (NBER), the group that officially calls US recessions: a broad fall in jobs, income, spending and output lasting months, not a single bad quarter. The NBER usually announces one long after it has begun, so the odds are about the start date, not the announcement.

The 25% alarm line

When the odds reach 25%, the site raises an alarm. The line was set before the model was relied on and is never moved after the fact. Below it, a recession is possible but not the likely path; above it, the risk is high enough to plan around.

How much to trust it

In testing over 1980–2024, months this measure put below 5% were followed by a recession 0.7% of the time (268 months). Its above 50% readings were less exact: recessions followed 46% of the time against 84% forecast. Each band rests on only a handful of recessions, so read the number as a guide to risk, not a precise frequency.

Why this number, and what a kill rule is

CycleWatch runs a detailed 12-block model of the economy, but it also keeps a simple benchmark built from two market signals. Kill rules, written in advance, say when to stop trusting the detailed model. Kill rule K4 is in force today, so the bond-market benchmark sets the headline; the detailed model reads 1.6% and is shown as a second opinion.

What it means for you

• It is a probability, not a prediction. Low odds do not rule a recession out, and high odds do not make one certain.
• It is not a signal to buy or sell anything. Recessions are hard to time, and markets often move before the data does.
• The useful question is how exposed you are if one does come. The Portfolio tab shows how your holdings behaved in past recessions; the US Consumer tab shows what is happening to prices, pay and credit now.
• The odds move when new data is published. Each change is logged, and the log cannot be edited after the fact.

This is a research tool, not investment, financial or career advice.