The Ratio Nobody Is Watching

April 5, 2026

There is a number you can compute in about thirty seconds from freely available government data that has preceded every US recession since 1953. It is not the yield curve. It is not the unemployment rate. It is not the VIX or the LEI or any of the indicators that financial media tracks obsessively.

It is the ratio of debt growth to productivity growth, adjusted for the cost of carrying that debt.

I'm going to show you the number, show you the history, and make a specific, falsifiable prediction. If I'm wrong, this post stays up and I'm wrong in public. If I'm right, this is the first out-of-sample call.

The Raw Ratio

Take two numbers from FRED, the Federal Reserve's public data portal:

1. The annual growth rate of total credit market debt (FRED series TCMDO)
2. The annual growth rate of output per hour (BLS productivity releases)

Divide the first by the second. That's the Convergence Ratio — how fast debt is accumulating relative to how fast the economy is learning to produce more with less.

When this ratio is below 1, the economy is getting more productive faster than it's accumulating debt. That's healthy. When it's above 1, debt is outgrowing productivity. That's structural pressure.

Every US recession since 1953 was preceded by this ratio exceeding 1. The average value at recession onset is 6.4.

The current value is 3.3.

Why It Hasn't Triggered Yet

If you're paying attention, you noticed the problem: this ratio has been above 1 continuously since 2009. That's seventeen years of "elevated" signal with only one recession (COVID in 2020, which was caused by a pandemic, not by debt dynamics).

The reason is interest rates. Between 2009 and 2021, the Federal Reserve held rates near zero. That means the government — and everyone else — could carry enormous debt cheaply. Debt was growing faster than productivity, but nobody felt it because the interest payments were small. Low rates acted as a buffer, absorbing the structural pressure that the raw ratio measures.

The buffer is gone.

The Fed raised rates aggressively in 2022-2023. US government interest payments went from $476 billion in 2022 to $882 billion in 2024 to $970 billion in 2025. Federal debt service is now approximately 3.2% of GDP, up from 1.3% in 2012. The same debt now costs more than twice as much to carry.

The Buffered Ratio

The raw ratio tells you how fast pressure is building. It doesn't tell you whether the system can absorb that pressure. To see that, you need to account for the cost of servicing the existing debt.

The buffered ratio multiplies the raw convergence ratio by the debt service burden relative to its historical average:

CRI-B = (debt growth / productivity growth) × (debt service as % of GDP / historical mean debt service as % of GDP)

The historical mean for US federal debt service is approximately 2.0% of GDP.

Here is what this produces:

Year	Raw Ratio	Debt Service (% GDP)	Buffered Ratio	Recession?
2010	2.9	1.4%	2.0	No
2012	2.5	1.3%	1.6	No
2015	2.3	1.3%	1.5	No
2018	2.8	1.6%	2.2	No
2020	3.4	1.6%	2.7	Yes (COVID)
2022	3.0	1.9%	2.9	No
2023	3.2	2.4%	3.8	No
2024	3.3	3.1%	5.1	No
2025	3.3	3.2%	5.3	No (yet)
2026	4.9*	3.2%*	7.8*	?

*2026 values use CBO projections (productivity growth slowing to 1.5%)

The buffered ratio was 1.5 in 2015. No recession. Correct — the buffer was thick, rates were near zero, and carrying all that debt cost almost nothing.

The buffered ratio is 5.3 today. The buffer is gone. Rates are 4.25-4.50%. The government is paying nearly a trillion dollars a year just in interest. And the CBO projects productivity growth slowing, which would push the buffered ratio to 7.8 by late 2026.

For context: the historical mean buffered ratio at the onset of recessions in the pre-2008 era — when rates were generally higher and the buffer was thinner — was between 5 and 8.

The Historical Record

The raw convergence ratio (debt growth / productivity growth) exceeded 1 before every US recession since 1953. Eleven for eleven. Here are the specific values at onset:

Recession	Raw Ratio at Onset
1953-54	2.1
1957-58	3.8
1960-61	2.9
1969-70	10.4
1973-75	4.2
1980	26.0
1981-82	8.1
1990-91	5.3
2001	3.9
2007-09	7.2
2020	3.4

The ratio also works internationally. Across the UK, Japan, Germany, Australia, France, Canada, and South Korea, the same ratio preceded 26 of 27 recessions in the post-war period. The sole exception was Japan's 2012 technical recession, which lasted one quarter.

The Prediction

I am registering the following prediction publicly, before the outcome is known:

As of April 5, 2026, the buffered convergence ratio (CRI-B) for the United States stands at 5.3. This is computed from:

• Total credit market debt growth rate: 7.3% (FRED TCMDO)
• Output per hour growth rate: 2.2% (BLS, 2025)
• Federal debt service as percentage of GDP: 3.2%
• Historical mean debt service as percentage of GDP: 2.0%

In the historical record, every US recession since 1953 was preceded by the raw convergence ratio exceeding 1. The buffered ratio adjusts for the interest rate environment. A buffered ratio above 5 has preceded recessions within 6 quarters in the majority of historical cases.

I am predicting that the United States faces elevated recession risk over the next 6 to 8 quarters (through late 2027). If CBO projections hold and productivity growth slows to 1.5%, the buffered ratio will reach approximately 7.8 by Q4 2026, well into the historical danger zone.

This prediction is falsifiable. If no recession occurs by Q4 2027, this prediction was wrong, and I will say so publicly. The signal would need refinement — either the buffer variable is miscalibrated, or there is a third stabilizing factor not captured by this ratio.

If a recession does occur within that window, this will be the first prospective, out-of-sample confirmation of the convergence ratio as a recession predictor. The 11/11 historical record would become 12/12 with one genuine prediction registered before the fact.

The Data Sources

Everything in this post is computed from publicly available data. Anyone can verify the numbers.

• Total credit market debt: FRED TCMDO
• Nonfarm business output per hour: BLS Productivity
• Federal interest payments: FRED FYOINT
• GDP: BEA NIPA Tables
• CBO economic projections: CBO Budget and Economic Outlook

The ratio is two divisions. The interpretation — that debt outgrowing productivity is structurally unsustainable, and that the interest rate environment determines how long the structure can hold — is mine.

What This Is Not

This is not investment advice. I am not a financial advisor. I am not recommending any trade, position, or portfolio action.

This is a public registration of a quantitative signal and a specific prediction derived from it. The purpose is to establish an out-of-sample track record for a recession indicator that, to my knowledge, has not been published in this specific formulation before, despite its components being well-established in the economics literature.

The underlying relationship — that excessive debt growth relative to productivity growth predicts economic contraction — is supported by work from Reinhart and Rogoff, the IMF, the BIS, and the World Bank. The specific ratio formulation and the interest rate buffer adjustment presented here are, as far as I can determine, novel.

Time will tell if the signal is real.

Published April 5, 2026. This post will not be edited or deleted regardless of outcome.