S&P 500 / GDP Ratio — Buffett Indicator Variant
Track the S&P 500 to GDP ratio. This Buffett Indicator variant compares stock market levels to economic output — a key overvaluation warning signal.
Current Value
Trigger Level: >0.20 = historically overvalued
Historical Trend
AI Analysis
Today's S&P 500 to GDP ratio is 0.2374, reflecting a slight decline from its recent peak of 0.2402 on August 14, indicating a downward trend after reaching historically overvalued levels above 0.20. The ratio has fluctuated within a narrow range of 0.2306 to 0.2402 over the past month, suggesting that while the market remains elevated relative to GDP, the recent decline may signal a potential cooling in market exuberance. This trend indicates an increased recession risk as the ratio remains above the warning threshold of 0.20, and the recent downward movement could suggest that the market is beginning to correct itself in response to economic realities.
What is the S&P 500/GDP?
The S&P 500/GDP ratio divides the S&P 500 index level by nominal GDP (in billions). It measures whether equity markets are growing faster than the underlying economy.
Why It Matters for Recession Risk
Warren Buffett called the total market cap/GDP ratio 'the best single measure of where valuations stand.' When markets significantly outpace GDP growth, it signals unsustainable valuations and heightened crash risk.
Historical Context
This ratio was around 0.05 in the 1980s, peaked at 0.15 during the dot-com bubble, and has exceeded 0.20 in recent years as market growth has dramatically outpaced GDP growth.
Related Indicators
Sahm Rule
Track the Sahm Rule in real time. Current value, historical chart, and AI analysis. The Sahm Rule has correctly signaled every US recession since 1970.
Yield Curve 2s10s
Monitor the 2-year/10-year Treasury yield curve spread in real time. Yield curve inversions have preceded every US recession since 1955.
Yield Curve 2s30s
Track the 2-year/30-year Treasury yield curve spread. A wider view of the term structure that signals long-term economic expectations.
Get Daily S&P 500/GDP Alerts
Receive SMS and email alerts when this indicator changes status. Stay ahead of the market.