We’ve seen a wide range of estimates for how the economy will be impacted by the shutdown.
The coming slowdown is likely going to be unlike anything we’ve seen since the Great Depression. It’s almost a foregone conclusion at this point that the contraction will be deep, we just have to hope that it will be short.
In the past, the stock market has fluctuated way more than the economy, which makes sense considering the economy is run by businesses and the stock market is driven by fear and greed.
In the Great Financial Crisis, real GDP declined just about 5% but stocks lost almost 60%. Is it possible that we see a double digit GDP decline and that the lows for the stock market are already in? Could the market actually outperform the economy?
I would guess not, but I’d love to be wrong. Ben and I spoke about this on this week’s Animal Spirits. Hope everybody is staying safe out there. Thank you for reading, listening, and watching.