Walmart Stock Hits Near-2008 Recession Warning Level
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- Walmart stock's outperformance versus the S&P Global Luxury Index has hit nearly its highest level ever — a level only previously reached during the 2008 financial crisis, per Paulsen's 'Walmart Recession Signal.'
- Jim Paulsen, who retired as chief investment strategist at The Leuthold Group in 2022, argues Walmart's customer base of cost-conscious, lower-income consumers makes it an early economic barometer, since those shoppers feel recessions first and most deeply.
- Paulsen does not forecast a 2024 recession but wrote he is 'becoming more convinced' that a significant slowdown is developing, as fellow experts grow more cautious — Goldman Sachs recently raised its recession probability to 30%.
- The S&P 500 fell 4.6% in the first quarter as investors weighed concerns including weakness in the AI revenue story and the war in Iran.
- The Shiller CAPE ratio has climbed to a level surpassed only once in history — during the dot-com bubble — meaning stocks remain expensive even after recent declines and may be vulnerable to further drops if a slowdown materializes.
- The article offers two counterpoints: a decline in stocks would compress valuations and create buying opportunities, and history shows markets have always recovered and reached new highs over the long term.
Why it matters: If Paulsen's signal is correct and a slowdown arrives while the Shiller CAPE ratio sits at dot-com-bubble levels, the S&P 500 faces the rare combination of a weakening economy and stretched valuations — a setup that historically has produced significant declines, though also the kind of lower prices that long-term buyers typically welcome.
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