The July 2026 reading came in elevated overall, and the story is continuity. The near term eased a little further, the long horizons barely moved, and the overall shape the model has carried through the spring and summer stayed intact. Low risk close in, some risk gathering out on the horizon, and nothing in the month that breaks the pattern.
The July reading
The model puts the probability that a recession begins within three months at 2.8 percent, and within six months at 5.1 percent, both firmly in the calm band and both lower than June. The twelve month reading sits at 18.1 percent, still calm. The longer horizons carry what elevation there is, 32.7 percent at eighteen months and 44.9 percent at twenty four. The shape is the same one the model has shown for months, low near and higher far, risk that lives on the horizon rather than close at hand.
What moved this month
The near term kept easing. The three month reading slipped from 3.3 to 2.8 percent, and the six month from 6.1 to 5.1, both a little lower and both well inside calm. The long end was close to flat, the twenty four month reading edged down from 46.6 to 44.9 percent, and the eighteen month from 33.1 to 32.7. After May's sharp drop and June's small firming at the long end, July mostly just held, with a slight downward drift across the board.
Underneath, the signals were steady and unchanged in direction from June. The yield curve stayed clearly positive, nowhere near the inversion that has preceded past recessions, and credit spreads narrowed a touch, a sign lenders remained relaxed. The stock market continued to rise on the model's six month trend. The one soft spot, business equipment orders, was still falling, though the decline was shallower than earlier in the year. Of the five signals the model watches, the same two lean toward risk as the prior two months, the curve's steepening trend and the drop in equipment orders, while the level of the curve, credit spreads, and the stock market are steady or easing.
What the shape means
A reading calm in the near term and elevated further out describes an economy with no downturn close at hand and some risk gathering at the edge of the window. The eighteen and twenty four month numbers are the ones to watch, and both drifted slightly lower in July while staying in the elevated band. Neither is near the high threshold. The near term, across the three, six, and twelve month horizons, is quiet and got a little quieter.
Three months now point the same way. Risk fell hard in May, firmed slightly in June, and eased again in July, settling into a steady, elevated-but-calm shape rather than trending toward a downturn. Month to month direction is what carries the meaning, and right now the direction is flat to gently lower. That can change with the data, but as it stands the reading describes an economy holding its position, not one moving toward the edge.
Reading the bands
The site sorts each horizon into three bands. Calm, under thirty percent, is where the cheapest preparation lives, the low cost window to build a little cash or keep options open while conditions are clear. Elevated, thirty to sixty five percent, is the range where shortening commitments and holding expansion in reversible steps starts to earn its keep. High, over sixty five percent, is a near warning. In July the near and middle horizons sit in the calm band and only the longest two are elevated, which places the economy in a preparing posture rather than a reacting one.
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