The GDP-weighted trend in the economic data (orange line) ha been relatively flat since early 2023, while global equity prices (black line) have risen. Typically, the trend in the economic data and stock market returns will converge over time. There has been a disconnect, with the stock market outperforming the economy. This disconnect has narrowed in the past two months with the pullback in stock prices.

The chart below shows the distribution of the global economic data tracked by Atlas Capital Advisors. Each economic index is assessed as “good” or “bad” based on how it compares with the entire past history of the index. The index is also categorized as “getting worse” or “getting better” based on how it compares to the most recent twelve months. As of February 2025, 44% of the economic indices we track are “getting worse,” either “bad getting worse” (30% of data, in red) or “good getting worse” (14%, in blue). The proportion “good” has edged up to 43%, with 57% of data in the “bad” category. US recessions have usually begun each time the “bad getting worse” (red) proportion reaches 50%. That level was breached in late 2022, but there was not a recession. There has been a modest improvement in the distribution of the data in the past nine months with the “Good Getting Better” cohort rising and “Bad Getting Worse” falling.