Figured out something interesting; let's discuss.
Assumptions:
-
US GDP will fall by X percentage this year
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GDP 2019 is $21.73 Trillion
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Total market cap is $28.48 Trillion
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Buffett indicator = market cap / gdp
Scenarios:
X - Buffett Indicator
5% - 138%
10% - 146%
15% - 154%
20% - 164%
25% - 175%
For reference,
dot com bubble height: 140%
2008: 107%
2020 All time high: 151%
The question, to economists, what is a reasonable estimate of GDP decline given the composition of US economy? Would that number make Buffett indicator go thru the roof?
Submitted April 14, 2020 at 08:14PM by onfallen https://ift.tt/3bcbVnE
