In the last recession, GDP contracted by less than 5%, but the stock market fell 57% from peak to trough. Stocks reacted to economic conditions in a way the “real” economy did not.
In our present situation, Wall Street strategists are predicting a second quarter contraction for the economy of up to 30% (annualized), which the drop in stock prices have already achieved.
Michael and Ben sort out some important distinctions between the stock market’s historic reaction to recessions and the recessions themselves…
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Michael Batnick and Ben Carlson are doing two podcast episodes a week these days, check out Animal Spirits here.
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