Valuation vulnerability
Top historical decile
97.03th percentile since 1980.
Period ending 31 Mar 2026
Details →OVERALL ASSESSMENT
Valuation vulnerability is high, while financial stress is subdued and payrolls are growing
The Board's nonfinancial corporate equity-to-net-worth measure is at the 97.03th percentile of its retained history since 1980. High historical valuation is vulnerability, not proof of a bubble or its timing. OFR's global financial stress index is not above its historical average; it does not currently confirm an acute market-stress episode. The conclusion is qualified by missing evidence; see the unavailable checks below. On the latest four-week comparisons, initial claims rose and continuing claims fell. The corporate-credit premium fell over three months through 2026-07-31, consistent with stronger risk appetite. OFR financial stress is down 0.01 index points over the latest 20 published observations through 2026-09-07. Real income excluding transfers and consumer spending both expanded over three months through 2026-07-31, supporting household demand in that period. Over twelve months, real income excluding transfers was down 0.38% and consumer spending was up 2.14%; the recent and annual directions differ. Household debt service was up 0.1 percentage points of income from a year earlier through 2025-12-31. Corporate debt service was down 1.1 percentage points of income from a year earlier through 2025-12-31. Debt-service evidence describes delayed capacity, not current market conditions.
Calculated 10 Sep 2026 · 00:35 UTC. No crash probability is estimated.
- No broad stress signal
- Vulnerability
- Stress observed
- Multiple channels
Current financial stress
Below or at historical average
Global financial-stress index (OFR).
Period ending 07 Sep 2026
Details →Employment direction
Payrolls growing
+214 thousand jobs over three months.
Period ending 31 Aug 2026
Details →Bank-credit conditions
No significant net tightening
Banks' reported changes in lending standards.
Period ending 30 Jun 2026
Details →Why caution is warranted
- The Board's nonfinancial corporate equity-to-net-worth measure is at the 97.03th percentile of its retained history since 1980. High historical valuation is vulnerability, not proof of a bubble or its timing.
Counterevidence
- OFR's global financial stress index is not above its historical average; it does not currently confirm an acute market-stress episode.
- Neither business-size category reports significant net tightening in the latest SLOOS. This describes changes in standards, not their absolute tightness.
- Nonfarm payrolls increased by 214 thousand jobs over three months.
- The exact Sahm-style recession check is unavailable because its full monthly lookback is not valid. Missing CPS months are not skipped or filled.
Additional indicators
What the additional evidence tells us
Are layoffs or continued claims rising?
Initial claims averaged 207250 over four weeks ending 2026-08-29, up 4.15% from 4 weeks earlier, down 10.09% from 52 weeks earlier. Continuing claims averaged 1781750 over four weeks ending 2026-08-22, down 0.5% from 4 weeks earlier, down 8.37% from 52 weeks earlier. Both measures describe insured unemployment and share the labor channel with payrolls and unemployment; they are not separate crisis confirmations.
Initial claims · current DOL release · Continuing claims · current DOL release
Calculations and comparison periods
| Diagnostic | Value | Unit | Window |
|---|---|---|---|
| Initial claims average 4 weeks | 207,250 | claims | 08 Aug 2026 → 29 Aug 2026 |
| Initial claims change 4 weeks percent | 4.1457286432160804020100503 | % | 11 Jul 2026 → 29 Aug 2026 |
| Initial claims change 52 weeks percent | -10.08676789587852494577006508 | % | 09 Aug 2025 → 29 Aug 2026 |
| Continuing claims average 4 weeks | 1,781,750 | claims | 01 Aug 2026 → 22 Aug 2026 |
| Continuing claims change 4 weeks percent | -0.50258271673879659360603099 | % | 04 Jul 2026 → 22 Aug 2026 |
| Continuing claims change 52 weeks percent | -8.36976086397531499100025714 | % | 02 Aug 2025 → 22 Aug 2026 |
What is corporate credit pricing telling us?
The Excess Bond Premium is -0.32 percentage points for 2026-07-31, down 0.12 percentage points over three months. The GZ corporate spread is 0.84 percentage points for 2026-07-31. A rising EBP is consistent with weaker corporate-bond risk appetite. Its level and change do not supply a crash probability.
Excess Bond Premium · GZ corporate bond spread
Calculations and comparison periods
| Diagnostic | Value | Unit | Window |
|---|---|---|---|
| Ebp level | -0.319112793 | percentage points | 31 Jul 2026 → 31 Jul 2026 |
| Gz spread level | 0.8422860534739828 | percentage points | 31 Jul 2026 → 31 Jul 2026 |
| Ebp change 3 months | -0.115121923 | percentage points | 30 Apr 2026 → 31 Jul 2026 |
What is changing beneath overall market stress?
OFR stress is down 0.01 index points over 20 published observations (2026-08-10 to 2026-09-07). Safe assets contributed the largest upward change (0.03 index points). All category contributions are at or below zero on 2026-09-07. The published category sum differs from the headline; the residual is retained explicitly. Categories explain one composite index and are not independent warning signals.
Global financial market stress · OFR credit contribution · OFR equity contribution · OFR safe assets contribution · OFR funding contribution · OFR volatility contribution
Calculations and comparison periods
| Diagnostic | Value | Unit | Window |
|---|---|---|---|
| Ofr headline change 20 observations | -0.011 | index points | 10 Aug 2026 → 07 Sep 2026 |
| Ofr credit contribution | -1.154 | index points | 07 Sep 2026 → 07 Sep 2026 |
| Ofr credit change 20 observations | 0.023 | index points | 10 Aug 2026 → 07 Sep 2026 |
| Ofr equity contribution | -0.599 | index points | 07 Sep 2026 → 07 Sep 2026 |
| Ofr equity change 20 observations | -0.008 | index points | 10 Aug 2026 → 07 Sep 2026 |
| Ofr safe assets contribution | -0.289 | index points | 07 Sep 2026 → 07 Sep 2026 |
| Ofr safe assets change 20 observations | 0.028 | index points | 10 Aug 2026 → 07 Sep 2026 |
| Ofr funding contribution | -0.141 | index points | 07 Sep 2026 → 07 Sep 2026 |
| Ofr funding change 20 observations | -0.079 | index points | 10 Aug 2026 → 07 Sep 2026 |
| Ofr volatility contribution | -0.69 | index points | 07 Sep 2026 → 07 Sep 2026 |
| Ofr volatility change 20 observations | 0.026 | index points | 10 Aug 2026 → 07 Sep 2026 |
| Ofr component residual | -0.001 | index points | 07 Sep 2026 → 07 Sep 2026 |
| Ofr component change residual | -0.001 | index points | 10 Aug 2026 → 07 Sep 2026 |
Are real incomes and spending holding up?
Real personal income excluding transfers through 2026-07-31: up 2.26% at an annualized rate over three months, down 0.38% over twelve months. Real consumer spending through 2026-07-31: up 3.33% at an annualized rate over three months, up 2.14% over twelve months. These are inflation-adjusted, seasonally adjusted flows. Three-month annualization describes the pace if repeated for a year; it is not a forecast. Income excludes transfer receipts, so comparing these levels cannot establish a household saving rate.
Real income excluding transfers · Real consumer spending
Calculations and comparison periods
| Diagnostic | Value | Unit | Window |
|---|---|---|---|
| Real income ex transfers change 3 months annualized percent | 2.2617325794204371818958222 | % | 30 Apr 2026 → 31 Jul 2026 |
| Real income ex transfers change 12 months percent | -0.37884365952074415320530409 | % | 31 Jul 2025 → 31 Jul 2026 |
| Real consumption change 3 months annualized percent | 3.3282498437398846113789928 | % | 30 Apr 2026 → 31 Jul 2026 |
| Real consumption change 12 months percent | 2.1378059777636850366634867 | % | 31 Jul 2025 → 31 Jul 2026 |
How much income goes toward servicing debt?
Households including nonprofit institutions serving households through 2025-12-31: estimated debt service was 8% of income, up 0.1 percentage points from a year earlier, with an own-history percentile rank of 18.52 across 108 quarters since 1999-Q1. Nonfinancial corporations through 2025-12-31: estimated debt service was 37.5% of income, down 1.1 percentage points from a year earlier, with an own-history percentile rank of 5.56 across 108 quarters since 1999-Q1. BIS ratios are model estimates with smoothed income and assumed loan maturities, published with a substantial quarterly delay. Rising ratios mean more income committed to debt payments in the reported period. Sector levels are not directly comparable; each percentile describes only that sector's history, not a crisis threshold or probability.
Household debt-service burden · Corporate debt-service burden
Calculations and comparison periods
| Diagnostic | Value | Unit | Window |
|---|---|---|---|
| Household debt service level | 8 | % | 31 Dec 2025 → 31 Dec 2025 |
| Household debt service change 4 quarters | 0.1 | percentage points | 31 Dec 2024 → 31 Dec 2025 |
| Household debt service history percentile | 18.51851851851851851851851852 | % | 31 Mar 1999 → 31 Dec 2025 |
| Corporate debt service level | 37.5 | % | 31 Dec 2025 → 31 Dec 2025 |
| Corporate debt service change 4 quarters | -1.1 | percentage points | 31 Dec 2024 → 31 Dec 2025 |
| Corporate debt service history percentile | 5.555555555555555555555555556 | % | 31 Mar 1999 → 31 Dec 2025 |
These diagnostics explain the monitored conditions. They do not add independent votes to the risk stage. See the historical evaluation →
What would change the conclusion
- A rise in OFR stress alongside significant SLOOS tightening would strengthen the financial-risk diagnosis.
- A negative three-month payroll change or a valid Sahm-style warning would strengthen the employment-risk diagnosis.
- High valuations with emerging financial or labor stress would be more concerning than high valuations alone.
Method, scope and reproducibility
This conclusion was calculated and saved with this snapshot. The website displays that saved result. The stages describe the evidence; they are not a countdown or a probability.
- This is an explicit ECO I interpretation policy, not a statistically calibrated crash or recession forecast.
- Daily, monthly and quarterly evidence retains its actual source period. Latest available is not real-time market pricing.
- OFR is global financial stress; Z.1 covers broad nonfinancial corporations, including private firms and inward FDI. Neither isolates AI or listed U.S. equities.
- Bank runs, private leverage, market concentration and AI earnings expectations are not comprehensively measured.
- Historical comparisons use retained current revisions, not reconstructed historical real-time information. A positive yield curve does not erase earlier inversion risk.
- Weekly claims, EBP changes and OFR components are descriptive supplements. Their incremental crisis-forecast performance is not established; they do not add independent votes or calibrated event probabilities to the four-channel policy.
- Income/spending growth and BIS debt-service ratios describe economic demand and payment capacity. The income measure excludes transfer receipts; the household ratio includes nonprofit institutions serving households. Quarterly BIS estimates arrive with a substantial delay. The history uses revisions available at this snapshot, not inferred original release vintages. These additions supply no validated crisis thresholds, independent alarm votes or calibrated event probabilities.
- Claims comparisons use published values retained from several releases; older weeks may not include every later seasonal revision.
Method: ero_public_risk_synthesis · version 3.0.0
Inspect the complete assessment JSON →Snapshot identity & machine-readable report
- Snapshot
- ero_us_macro_financial_20260910T003539Z_f004bde27e96
- Profile version
- 10.0.0
- Generated
- 10 Sep 2026 · 00:47 UTC
- Analytical content SHA-256
- f004bde27e969e3c81739b5588813c41b24e66d3926e28a0455a2692f9797820
Source: U.S. Bureau of Labor Statistics. BLS.gov cannot vouch for the data or analyses derived from these data after the data have been retrieved from BLS.gov. Data access dates are supplied as retrieved_at in canonical observations. Latest retained BLS access: 05 Sep 2026 · 21:45 UTC. BLS source terms
Source: BIS debt service ratio statistics. Model-based estimates. ECO I's calculations and interpretation are its own; BIS does not endorse them. BIS data are provided free of charge with attribution. BIS statistical-use terms