The bank found that from May through July, the “hard data” from the U.S. economy has shown an elevated risk level, standing at a probability of 93% most recently. This sits at “historically worrying levels,” UBS says, given this signal’s track record of identifying turning points using data from the National Bureau of Economic Research.
The bank notes other classic warning signs of an impending recession from the data, such as the inverted yield curve, which it notes is 23% inverted, steady in recent months but up sharply since the start of 2025. Based on building stress in credit markets, it finds the credit metrics-based recession probability has risen to 41%, roughly doubling since January.
Fortune’s reporting throughout 2025 has outlined mounting warning signs the U.S. is headed toward a recession, echoing and expanding on the UBS research note’s findings. But when UBS zooms in to the hard data, it finds that while most metrics are turning negative, it’s more in a “mile wide inch deep” kind of “malaise.” None of the hard series of data is showing “signs of rapid unraveling,” according to the team led by Pierre Lafourcade, resulting in an overall bill of health: “Soggy, soft, weak, yes, but not collapsing.”
The UBS analysis of “hard data” reflects the bank’s own proprietary factor model, which relies on objective, non-survey-based economic indicators such as personal income, consumption, industrial production, and employment data. It filters out sentiment surveys, purchasing manager indexes (PMIs), and financial market signals.
After a brief recovery at the end of 2024, the hard data signal tipped decisively back into negative territory starting in February 2025. The sideways movement since May suggests sustained weakness rather than any new acceleration downwards. According to the note, none of the major hard economic series were showing the kind of sharp, downside deviation (such as more than one standard deviation below trend) typically seen directly ahead of past recessions.
UBS averaged the hard data together with inverted yield curve and credit markets to produce an aggregate recession probability of 52% for July, up 15 percentage points since January and at levels historically associated with NBER-designated recessions. The bank’s recession tracker, therefore, points to a precarious balance for the US economy—much weaker than a soft landing, but not yet collapsing—leaving policymakers and market watchers on alert as 2025 progresses.
