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 0.2000, reflecting a significant decline from a peak of 0.2235 on April 17, 2026, indicating a reversal from a rising trend that had persisted since late March. This sharp drop suggests a potential cooling in market valuations, which, while still above average, may signal reduced investor confidence and an increased risk of recession as the ratio has fallen back to historically overvalued territory.
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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