May 2024

The GDP-weighted trend in the economic data (orange line) has been relatively flat during 2023 and so far in 2024, with a slight upward shift recently, while global equity prices (black line) rose. Typically, the trend in the economic data and stock market returns will converge over time. There is a small disconnect at present, with the stock market outperforming the economy. This can resolve either with an improvement in the global economy or a reduction 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 May, 50% of the economic indices we track are “getting worse,” either “bad getting worse” (35% of data, in red) or “good getting worse” (15%, in blue). The proportion “good” has been steady for more than a year around 35%, vs. 65% of data in the “bad” category. US recessions have begun each time the “bad getting worse” (red) proportion reaches 50%. That level was breached in late 2022, but that has not yet led to a recession. There has been a general improvement in the distribution of the data in 2023 through May 2024, with the “Bad Getting Better” cohort rising and “Bad Getting Worse” falling.

By / Categories: Data Analysis /

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