A Wall Street vet’s Walmart recession indicator just hit its highest point since 2008—and he says the fear ‘just keeps multiplying’

Forget the Fed. Forget nonfarm employment. Forget even industrial production and real income. For Jim Paulsen, the real recession indicator is watching Walmart.

Paulsen, former chief investment strategist at investment research firm the Leuthold Group, devised an indicator he dubs the “Walmart Recession Signal” (WRS), which tracks the stock price of Walmart against the S&P Global Luxury Index, a basket of 80 companies producing or distributing luxury goods. He said that since economic downturns are usually felt first by lower-income individuals, an increase in Walmart’s stock price could indicate a potential economic downturn.

Paulsen wrote in a Substack post that the indicator is now at its highest level since the 2008 Great Recession. “‘Walmart Worries’ just keep multiplying,” he wrote. “It’s currently close to the highest level ever recorded, which was during the Great Financial Crisis of 2008–09.”

The central premise of the WRS is this: During economic downturns, consumers tend to shift their spending toward discount vendors like Walmart, and away from luxury retailers. It’s one way households cut down on costs when economic pressure is high. “As economic activity slows and recession risk builds, retailing purchasing patterns tend to gravitate toward discounters like Walmart and away from luxury re...