Structural Outlook
Current leader readings alongside validated historical lag relationships — not forecasts.
The composite itself sits higher than 44% of all published quarters since 2005.
Elevated Leader Readings (3)
3 of 8 validated relationships currently have an elevated leader reading. The lag windows below describe the historical tests; they do not predict a follower's next reading.
Energy Price Inflation (CPI) is currently elevated (+1.0σ). In the raw-level historical test, the level of Energy Price Inflation (CPI) was associated with the level of Bottom-Quartile Wage Growth vs. Inflation at a 1 quarter lag with strong correlation (r = −0.73).
Historical association only; no causal effect or future follower value is estimated. See methodology.
Delinquency Rate on Credit Card Loans is currently elevated (+1.1σ). In the raw-level historical test, the level of Delinquency Rate on Credit Card Loans was associated with the level of Charge-Off Rate on All Loans at a 3 quarters lag with moderate correlation (r = +0.66).
Historical association only; no causal effect or future follower value is estimated. See methodology.
Delinquency Rate on Consumer Loans (ex credit card) is currently elevated (+2.0σ). In the raw-level historical test, the level of Delinquency Rate on Consumer Loans (ex credit card) was associated with the level of Credit Card Delinquency at Banks Outside the Top 100 at a 13 quarters lag with moderate correlation (r = −0.59).
Historical association only; no causal effect or future follower value is estimated. See methodology.
Wage Growth vs CPI Spread is currently within its baseline (-0.4σ). In the raw-level historical test, the level of Wage Growth vs CPI Spread was associated with the level of Bottom-Quartile Wage Growth vs. Inflation at a 2 quarters lag with strong correlation (r = +0.89).
Historical association only; no causal effect or future follower value is estimated. See methodology.
Initial Unemployment Claims is currently below its baseline (-0.6σ). In the raw-level historical test, the level of Initial Unemployment Claims was associated with the level of Unemployment Rate at a 1 quarter lag with strong correlation (r = +0.85).
Historical association only; no causal effect or future follower value is estimated. See methodology.
Charge-Off Rate on Single-Family Residential Mortgages is currently within its baseline (-0.4σ). In the raw-level historical test, the level of Charge-Off Rate on Single-Family Residential Mortgages was associated with the level of Charge-Off Rate on All Loans at a 0 quarters lag with strong correlation (r = +0.82).
Historical association only; no causal effect or future follower value is estimated. See methodology.
Initial Unemployment Claims is currently below its baseline (-0.6σ). In the raw-level historical test, the level of Initial Unemployment Claims was associated with the level of Involuntary Part-Time Share of Employment at a 1 quarter lag with moderate correlation (r = +0.70).
Historical association only; no causal effect or future follower value is estimated. See methodology.
Healthcare Inflation Premium (Medical CPI minus Overall CPI) is currently below its baseline (-0.5σ). In the raw-level historical test, the level of Healthcare Inflation Premium (Medical CPI minus Overall CPI) was associated with the level of Initial Unemployment Claims at a 2 quarters lag with moderate correlation (r = +0.52).
Historical association only; no causal effect or future follower value is estimated. See methodology.
Cascade Timeline
This chart connects pairwise lag relationships recorded in the cascade artifact. The sequence is descriptive: it does not establish that one indicator triggers another or predict downstream readings.
Distress Cascade
Source: American Default Research leading indicator scanner. Chart axis uses a scanner-local z-score against a 2015-2024 baseline to place the chained indicators on one scale; this is a display normalization, not the American Distress Index method. Shaded regions: GFC (2007-2009), COVID (2020).
Historical Track Record
Each relationship was validated against up to three historical crises. The out-of-sample correlation (OOS r) tests whether the relationship held in data the model never saw during calibration.
| Leader → Follower | Lag | r | GFC | COVID | 2001 | OOS r |
|---|---|---|---|---|---|---|
| Wage Growth vs CPI Spread → Bottom-Quartile Wage Growth vs. Inflation | 2q | +0.89 | ✓ | ✓ | — | +0.91 |
| Initial Unemployment Claims → Unemployment Rate | 1q | +0.85 | ✓ | ✓ | — | +0.81 |
| Charge-Off Rate on Single-Family Residential Mortgages → Charge-Off Rate on All Loans | 0q | +0.82 | ✓ | — | ✓ | +0.46 |
| Energy Price Inflation (CPI) → Bottom-Quartile Wage Growth vs. Inflation | 1q | -0.73 | ✓ | ✓ | — | -0.82 |
| Initial Unemployment Claims → Involuntary Part-Time Share of Employment | 1q | +0.70 | ✓ | ✓ | — | +0.59 |
| Delinquency Rate on Credit Card Loans → Charge-Off Rate on All Loans | 3q | +0.66 | ✓ | — | ✓ | +0.83 |
| Delinquency Rate on Consumer Loans (ex credit card) → Credit Card Delinquency at Banks Outside the Top 100 | 13q | -0.59 | ✓ | — | ✓ | -0.74 |
| Healthcare Inflation Premium (Medical CPI minus Overall CPI) → Initial Unemployment Claims | 2q | +0.52 | ✓ | ✓ | — | +0.51 |
Lag: quarter offset at the pair's strongest tested historical association.
r: Pearson correlation at optimal lag. OOS r: Out-of-sample validation (calibrated on Q1 1939 through Q4 2012, tested on Q1 2013 through Q3 2026).
GFC: 2007–2009 financial crisis. COVID: 2020. 2001: Dot-com recession.
How We Got Here
Survival rate: 0.0082%. Read the full methodology →
Frequently Asked Questions
What is a structural projection?
A structural-projection monitor reports pair-specific historical associations where one series appears earlier than another at a recorded lag. The scanner ran 97,060 lagged cross-correlation tests; 8 relationships survived all five filters. The results do not estimate a causal effect or a future value.
How are leading indicator relationships validated?
Each relationship must pass five statistical filters: (1) FDR-corrected cross-correlation on raw levels, (2) cross-correlation on first-differenced series, (3) validation during at least one historical crisis, (4) a Granger test of whether lagged leader terms add information beyond the follower's own history under the fitted specification, and (5) out-of-sample validation. The fully validated set is 0.14% of 5,808 unique dual-filter relationships. Passing does not establish ordinary causation or guarantee recurrence.
What do the leader-reading labels mean?
'Leader elevated' means the current standardized reading is above the page's upper display threshold. 'Leader below baseline' means it is below the lower display threshold. 'Leader within baseline' covers readings between those thresholds. 'Leader reading unavailable' means the page could not compute a current standardized reading from the committed data. These labels describe the current leader state beside a historical pair result. They do not activate a forecast, predict a downstream effect, or estimate a future follower value or timing.
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