Source: Fortune
Summary
Jim Paulsen, former chief investment strategist at Leuthold Group, has created the “Walmart Recession Signal” (WRS), which tracks Walmart’s stock price against the S&P Global Luxury Index. The indicator is now at its highest level since the 2008 Great Recession, suggesting a potential economic downturn. Walmart’s stock has climbed over 40% in the past year, while the luxury index has fallen 13.6% since the beginning of the year. The economy is facing increasing pressure, with a dismal February jobs report, rising oil prices, and a housing market affordability crisis. Moody’s Analytics has raised its recession outlook to 48.6%, while Goldman Sachs and EY-Parthenon also predict a higher likelihood of a recession.
Our Reading
The numbers tell one story. Walmart’s booming year and heightened recession odds are raising concerns. The “Walmart Recession Signal” is flashing red, with the indicator at its highest level since 2008. The economy is facing a perfect storm of factors, from a dismal jobs report to rising oil prices. The housing market is facing a dire affordability crisis, and consumer sentiment remains grim. The WRS has a close historical relationship with annual real GDP growth and the unemployment rate, and Paulsen warns of a significant U.S. economic slowdown.
Paulsen isn’t betting on a recession just yet, but he’s becoming more convinced that a slowdown is unfolding. The question is, will the economy be able to arrest the decline?
Author: Evan Null
