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/GDP ratio is 0.2340, showing a slight increase from a recent low of 0.2306 on August 1, 2026, after a downward trend from a peak of 0.2377 on July 11. This indicates a reversal in the recent decline, but the ratio remains above the historically overvalued threshold of 0.20, suggesting that markets are still outpacing GDP growth. The current trend points to heightened recession risk, as the sustained overvaluation indicates potential market corrections ahead. The recent fluctuation within a narrow range (0.2306 to 0.2377) further emphasizes the fragility of market conditions, with the risk of a downturn if economic fundamentals do not catch up.
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.
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