Does the effect "Reduce all HP recovery by 2" affect Setback's cards?
Recovery only applies when you are regaining health, not when health is being restored.

As noted by phantaskippy on the Greater Than Games forums:


  Regain and restore are different terms.  Health can still be restored if Health can't be regained.


Despite only the term restore showing up in the glossary, regain and restore are both keywords that apply to different abilities. This is further clarified here (page 17) and here (just search for the word "restore"). Something that restores health is not affected if an ability increases HP that is regained.

In the forum post, phantaskippy goes on to say:


  There is recovery as a term as well, but that has only applied to Regaining health so far.


In some cases, the word recovery is used to reference regaining health. This does not impact the keyword restore and will only impact abilities that use the keyword regain.

For your specific card interactions, if Oppressive Smog was in play, Setback would regain 2-2 HP (0) with Karmic Retribution. If Silver Lining would trigger, Setback will restore HP equal to the number of tokens in your Unlucky Pool with no reduction.



For what it's worth, phantaskippy is a playtester and active user on the GTG forums. He also generated a series of story challenges with rules tweaks for "epic" gameplay. I mention this to show that his comments on the forums carry weight and are generally trustworthy.