48 years of cycle calls, tested month by month.

By Danté M. Shackelford, Founder and Managing Principal of EMx Lending
Updated November 5, 2026

Every quarter we tell clients where the economy sits in its cycle and what posture to take: Grow, De-risk or Defend. A call like that is only worth something if it holds up over many cycles, not just the last one. So we tested it.

The results

Across all 585 months, the read put investors in a Grow posture 44% of the time, De-risk 48% of the time and Defend 8% of the time. It landed on all six stages: Recovery, Expansion, Late Expansion, Peak, Slowdown and Recession.

What goes into the read

The method combines a small set of public economic indicators, the kind the Federal Reserve and economists watch. Some look ahead, like the yield curve and building permits. Some confirm what is happening now, like the Sahm rule on unemployment and economic growth. Two more gauge how mature the cycle is. Leading signals set the direction, and coincident signals have to confirm a downturn before the read says Recession.

Housing gets its own read next to the economic stage, so we can tell when a housing market is moving differently from the economy. That matters. After the housing read turned Correcting, national home prices fell an average of 2.2% over the next 12 months. After it read Heating, they rose 7.3%. In 2006 it read housing as Correcting while the economy still read Expansion.

Seven stretches worth knowing

1979 to 1982: the double dip

Slowdown from September 1979, four months before the 1980 recession, then Recession by April 1980. A brief Recovery followed, then Recession again from January 1981, six months before the second, longer downturn.

1989 to 1991: the savings and loan bust

Slowdown from February 1989 as the yield curve inverted, Recession from October 1990 once jobs and growth confirmed it, and Recovery by March 1991. Home prices fell nationally for the first time in the data.

1995 to 2001: the long late cycle and the dot-com bust

Expensive stocks kept the cycle reading late from 1995 on, so the method sat in De-risk for years while real estate kept rising. It still read Recession from March 2001, the month the recession began.

2006 to 2009: the housing bust

Peak from February 2007 and Slowdown from August 2007, ahead of the official December 2007 start. Recession from July 2008, and Recovery by mid-2009.

2019 to 2021: the pandemic

Peak and Late Expansion through late 2019. Recession at once in April 2020, then Expansion again by September 2020.

2021 to 2024: rate shock and the Sahm scare

Through the 2022 rate shock the read held at Slowdown, because jobs and growth stayed healthy, and no recession came. In July and August 2024 it read Recession when the Sahm rule crossed its trigger, then cleared. That is its one false alarm in the recent stretch.

2025 to 2026: where we are now

With stocks far above trend and a Fed that cut, paused, then raised rates again in September 2026, every read since early 2025 has been Slowdown, Peak or Late Expansion. All of those carry a De-risk posture. See the Q4 2026 market update for what that means for investors.

Where it gets it wrong

• One false alarm: July to August 2024 read Recession. Unemployment rose because more people were looking for work, not because of layoffs.
• One early call: February to March 1981 read Recession about four months before the 1981 to 1982 recession began.
• Long late cycles: when stocks stay expensive, the read can sit in De-risk for years, as in 1995 to 2000 and again now. That call is defensible but can feel early.
• A small sample: six recessions is not many. Treat these results as evidence the method is sound, not proof it can't miss.

How we use it

The read sets a posture, not a prediction of the date. It tells an investor how much risk to take: how much leverage, how much in reserves, and how cautiously to underwrite an exit. Client Partners get it applied to their own market and portfolio every 90 days in a Market Cycle Brief, as part of Market Analysis in the 7 Pillars of Profit.

Method notes: the test scores each month using only information available at the time. Some inputs, such as GDP and building permits, use today's revised figures, which can differ slightly from the first numbers investors saw. Official recession dates are from the National Bureau of Economic Research.

This is general education, not investment, legal or tax advice. Loan terms are general guidelines, depend on credit, experience and the property, are subject to change and are not a commitment to lend. EMx Lending makes business-purpose loans on non-owner-occupied investment property in all states except Vermont, North Carolina, North Dakota, South Dakota, Idaho, California, Arizona and Nevada.