Macro Regime — Where Are We in the Cycle?
Multi-dimensional classification · Walk-forward models · Updated daily
As of October 2026, MacroRadar reads the US economy as Late Cycle on growth, Stable on inflation, and Neutral on financial conditions, with 76% cross-dimensional agreement. Each dimension is classified independently and walk-forward validated on decades of data.
The economy is read across four independent dimensions. Each is classified on its own evidence and confidence below — the single regime label is a synthesis of these, not a substitute for them.
Growth
72% confidenceLate Cycle
Is the economy expanding or contracting? Based on GDP, employment, industrial production, and leading indicators.
Market
58% confidenceNeutral
Is the stock market in a bull, bear, or correction regime? Based on price trends, volatility, and breadth.
Inflation
51% confidenceStable
Is inflation accelerating, stable, or decelerating? Based on CPI components and inflation expectations.
Financial Conditions
97% confidenceNeutral
Are financial conditions loose or tight? Based on credit spreads, lending standards, and monetary policy.
What this means
The economy is currently classified as Late Cycle on the growth dimension, with Neutral market conditions. All dimensions are broadly aligned — the economic signal is clear.
The MacroRadar Sentiment Index reads 30 (Fear) — the band a six-component composite lands in today, each component ranked against its own trailing three years. It describes where conditions sit, not what follows.
Historical context
The current macro configuration — late cycle growth, neutral markets, stable inflation, neutral financial conditions — most closely resembles March 2025, a period that was not followed by a recession within 24 months.
MacroRadar Risk Score — Historical (1985–Present)
Composite risk score combining cross-dimensional regime signals. Higher readings have historically preceded market stress. Historical values are fitted on the full sample (in-sample), not point-in-time — read the shape, not the exact level at any past date.
The Risk Score measures cross-dimensional stress — how much growth, market, inflation, and financial conditions are diverging from each other. This is different from recession probability, which estimates the likelihood of an actual recession. The risk score can be elevated during late-cycle transitions even when recession probability remains low.
Regime Probabilities — Historical (1985–Present)
How probability mass has shifted between economic regimes over 40 years, generated walk-forward — the model is refit at each quarterly step on observations up to that date, with input series as later revised. Green dominance = expansion. Red spikes = approaching recession. The view opens on the last decade; the range buttons reach back to 1985.
Each color represents a regime state — the chart shows which regime the economy was most likely in at each point in time. When one color dominates, the signal is clear. Rapid shifts in color indicate regime transitions. Dashed white lines mark NBER recession periods.
Why there is no transition forecast here
This page used to print a probability for each regime at 3, 6 and 12 months. Those numbers were removed. They came from a model scored on the same rows it was fitted on, and no written rule let you recompute them — so they were a forecast wearing the clothes of a measurement.
What replaces them is narrower and checkable: conditional histories — every past window that matched a stated condition, what followed each one, and the count. For recession risk specifically, the recession probability model is scored walk-forward and publishes its record.
Indicator Divergences
When indicators that usually move together start diverging, it often signals a regime transition ahead
Credit spreads and consumer sentiment diverging: spreads at 85p, sentiment at 1p
Consumer sentiment and leading index diverging: sentiment at 1p, leading at 77p
Building permits and industrial production diverging: permits at 38p, production at 96p
Fed funds and HY spread diverging: fed funds at 69p, spread at 85p
Sahm rule and initial claims neutral: Sahm at 32p, claims at 1p
Housing starts and permits neutral: starts at 16p, permits at 38p
VIX and credit spreads neutral: VIX at 64p, spreads at 85p
Yield curve 10Y-3M and leading index confirming: curve at 60p, leading at 77p
Yield curve and unemployment confirming: curve at 46p, unemployment at 55p
VIX and unemployment confirming: VIX at 64p, unemployment at 55p
Most Similar Historical Periods
Based on multi-dimensional macro state distance — which past environments most resemble today?
| Period | Similarity | Recession followed? |
|---|---|---|
| 2025-03-01 | 79% | No (within 24 months) |
How this regime affects portfolios
The current regime classification drives MacroRadar's portfolio allocation. Each regime has a historically optimized asset mix based on walk-forward backtesting since 1990.
What this does not do
Regime classifications describe the current state of the economy relative to past episodes. They are descriptive, not prescriptive: they do not predict future market outcomes, do not anticipate exogenous shocks, and are not investment advice. For the full scope, validation approach, and limitations, see the methodology.
Cite this page
MacroRadar, "US Macro Regime," https://www.macroradar.io/macro-regime (as of October 2026).
Frequently Asked Questions
What is a macro regime?
A macro regime describes the current state of the economy across multiple dimensions — growth, inflation, financial conditions, and market behavior. Rather than looking at individual data points, regime classification identifies the overall pattern. For example, 'late-cycle expansion with rising inflation and tightening financial conditions' is a regime that has historically preceded market corrections.
How does MacroRadar classify economic regimes?
MacroRadar uses machine learning models across multiple dimensions. Each dimension is classified independently using economic indicators, then a fusion layer detects agreement or divergence across dimensions. All models are walk-forward validated on decades of historical data: refit at each step on observations up to that date. Input series are as later revised — vintage-level revisions are not reconstructed.
Where are we in the economic cycle right now?
The current regime is Late Cycle (growth), Neutral (market), Stable (inflation), and Neutral (financial conditions). Cross-dimensional agreement is 76%. See the full breakdown above.
How does the macro regime affect my portfolio?
Different regimes historically favor different asset allocations. Expansion regimes favor equities and cyclical assets. Late-cycle regimes favor defensive positioning and shorter-duration bonds. Contraction regimes favor treasuries, cash, and gold. MacroRadar's regime-optimized portfolio adjusts allocation based on the current classification.