Prior to the 1990s, stock prices would decline before drops in earnings.
At times, stock prices would anticipate a decline in earnings that would not materialize.
But prices would generally lead earnings which slightly led the economy. pic.twitter.com/UcabAxQr6F
— Eric Basmajian (@EPBResearch) January 14, 2025
Even in the mid-cycle slowdown of 2016, earnings declined for almost a year before stock prices responded.
Stock prices slightly led the 2022 decline in earnings, perhaps due to the rapid change in expected interest rates but this has been an exception more recently. pic.twitter.com/hCZTmNDrW4
— Eric Basmajian (@EPBResearch) January 14, 2025
Major stock indexes like the S&P 500 have become much more coincident indicators of the labor market rather than a forward-looking indicator about economic conditions.
— Eric Basmajian (@EPBResearch) January 14, 2025
Monetary policy has caused a significant change in the growth rate of the earlier labor market sectors, but not yet a contraction.https://t.co/j2d08ZBuzO
— Eric Basmajian (@EPBResearch) January 14, 2025
Needless to say, this has been a unique cycle indeed.https://t.co/BvS65p3WJk
— Eric Basmajian (@EPBResearch) January 14, 2025
Equity concentration at market peaks. https://t.co/cBWSs0EW9P pic.twitter.com/cqedvI8vUV
— Financelot (@FinanceLancelot) January 15, 2025