Sunday, September 20, 2009

Charting the S&P 500 & GDP Growth

Yesterday I took a look at the relationship between the S&P 500 and the unemployment rate. This morning I wanted to look at how the S&P and GDP figures align (or don't align) over the years. Again, I didn't quickly find the charts I was looking for, so I created my own.

Using S&P data from Yahoo! Finance and GDP data from the Bureau of Economic Analysis, I looked at two things:

- Plotting same year S&P 500 growth and GDP change
- Plotting current year S&P growth and next year's GDP change

I guess the difference here is whether you think the market is reflecting current mood / environment or is it anticipating what lies ahead. It's probably some combination of both. How's that for illuminating and actionable insight?

Some stats here that I perhaps knew but never quite processed fully until looking at this is how the years after big drops really do snap back.

1974: down 29.7%
1975: up 31.5%

2002: down 23.4%
2003: up 26.4%

2008: down 38.5%
2009 YTD: up 18.3%

Again, these charts will be most legible if you hit the "full" setting in the player below.