TXMC Recession Sequence
A 31 step sequence tracking the order in which economic indicators have tended to fire before, during and after a recession. Adapted from the recession sequence presented in the Alpha Beta Soup videos.
Progress
12/31
Current Phase
Pre-Recession
Pre-Recession
Leading indicators that fire before a recession begins
New Orders Peak
ISM New Orders peaked February 2021. Now 55.3 in September 2026, back in expansion.
Triggered: 2021-02
PMI Peak
ISM Manufacturing PMI peaked January 2021. Now 54.5 in September 2026.
Triggered: 2021-01
Housing Permits Peak
Housing permits peaked December 2022. 1,400K in September 2026, down from 1,433K in July and broadly flat for a year.
Triggered: 2022-12
Yield Curve Inversion
Yield curve inverted July 2022. Has since uninverted, currently +0.31%, flatter than +0.47% in August.
Triggered: 2022-07
Unemployment Off Low
Unemployment left its 3.4% low in July 2023. 4.2% in September, up from 4.1%, below the November 2025 high of 4.5%.
Triggered: 2023-07
Earnings Peak
Corporate profits at a record $5,112.0B in Q2 2026, up from $4,673.2B in Q1. No earnings peak.
Market High
S&P 500 set a record of 7,819 on 6 October 2026 and stood around 7,757 on 21 October. No cyclical top.
Tightening Ends
Fed Funds peaked at 5.33% in July 2023. The Fed raised rates again in September 2026, effective rate now 3.88%.
Triggered: 2023-07
Industrial Production Peak
Industrial production at a new high of 103.95 in September 2026. No peak.
CPI YoY Peak
CPI year on year peaked at 9.1% in June 2022. 3.72% in September 2026, up from 3.30% in July.
Triggered: 2022-06
New Orders Contraction
ISM New Orders fell below 50 in January 2022. Now back in expansion at 55.3.
Triggered: 2022-01
PMI Contraction
ISM PMI fell below 50 in November 2022. Now back in expansion at 54.5.
Triggered: 2022-11
Real Sales Peak
Real retail sales peaked at $229,244M in April 2022 on revised figures. $221,536M in September 2026, about 3% below that peak.
Triggered: 2022-04
Recession
What happens during the downturn
Recession Starts
No recession declared by NBER. The September observation shows expansion.
Yield Curve Uninverts
Yield curve returned to positive in September 2024. Currently +0.31%.
Triggered: 2024-09
Real Income Peak
Real personal income (ex transfers) at $17,046.6B in August 2026, just below July's record of $17,059.8B. No peak.
Easing Starts
Fed began cutting rates September 2024, then raised them in September 2026. Effective rate now 3.88%.
Triggered: 2024-09
New Orders Trough
ISM New Orders recovered to 55.3 without a recession. No recession trough.
Market Low
S&P 500 near records around 7,757. Nowhere near a cyclical low.
PMI Trough
ISM PMI recovered to 54.5 without a recession. No recession trough.
Housing Permits Trough
Housing permits at 1,400K in September 2026, above the August 2025 low of 1,330K. No recession trough.
Industrial Production Trough
Industrial production at a new high of 103.95. No trough.
Recovery
Signs the recession is ending
Recession Ends
No recession to end.
Real Sales Trough
Real retail sales at $221,536M in September 2026, rising but below the 2022 peak. No recession trough.
Real Income Trough
Real income near its July record. No contraction.
Unemployment High
Unemployment at 4.2%, below the November 2025 high of 4.5%. No recession high.
Easing Ends
The Fed raised rates in September 2026. This step follows a recession, so it stays open.
Earnings Trough
Corporate profits at a record. Not in a recession context.
New Orders Contraction Ends
ISM New Orders are back above 50 without a recession first. This step follows a recession, so it stays open.
PMI Contraction Ends
ISM PMI is back above 50 without a recession first. This step follows a recession, so it stays open.
CPI YoY Trough
CPI year on year at 3.72%, rising again. No trough.
About this framework
This sequence is adapted from the recession sequence presented in the Alpha Beta Soup videos. It lists economic indicators in the order they have tended to fire around past recessions.
In outline: monetary tightening, then peaking orders and PMI, yield curve inversion, rising unemployment, peaks in industrial production and inflation, the end of tightening, contracting new orders, a peak in real sales, and then recession.
Each recession is different, so use it as a checklist, not a forecast. The value is in tracking where we are in the sequence, not in predicting exact timing.