What Goldman’s Recession Manual Is Telling Us About This Recession

Stéphane Renevier

5 months ago4:14 mins

What Goldman’s Recession Manual Is Telling Us About This Recession

Goldman Sachs is famous for its recession manual: a deep-dive handbook on past recessions and what brought them about. And now, with every economist and their dog predicting that the US is headed for a dramatic slowdown, it’s the perfect time to pick up the manual, dig into the three metrics it focuses on, and see what it can tell us about what comes next.

Metric #1: Share prices

In the past 12 recessions, the median drop of the S&P 500 – measured from peak to trough – was 24%. That means they dropped less than that on six occasions, and rose by more on the other six. But when they dropped more, they dropped a lot more: 48% in 1973, 49% in 2001, and 57% in 2008. It took a while for prices to go from peak to trough too: as long as 30 months in 2001.

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