The latest update to the Recession Probability Track shows how it has progressed deeper into a higher probability of recession since our last update a little over six weeks ago.

The chart shows the current probability of a recession being officially determined to have begun between 12 June 2023 and 12 June 2024 is 78.5%. If the Fed follows through on pausing the series of rate hikes it began in March 2022, which we'll know within the next two days, that lack of action won't stop the projected recession probability from rising. Even without a rate hike in June 2023, the U.S. Recession Probability Track will still breach the 80% threshold before the end of the month. That's a few weeks earlier than we had projected in our previous update.

Looking past that point, Federal Reserve officials have been signaling they'd like to resume hiking rates after they wrap up their next two-day meeting on 27 July 2023, which has become the expectation. We'll revisit how the recession probability projections change before that next meeting.

Analyst's Notes

The Recession Probability Track is based on Jonathan Wright's yield curve-based recession forecasting model, which factors in the one-quarter average spread between the 10-year and 3-month constant maturity U.S. Treasuries and the corresponding one-quarter average level of the Federal Funds Rate. If you'd like to do that math using the latest data available to anticipate where the Recession Probability Track is heading, we have a very popular tool to do the math.

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