Recent Buffett Indicator Overview

The Buffett Indicator (aka, Buffett Index, or Buffett Ratio) is the ratio of the total United States stock market to GDP. As of August 31, 2024 the ratio values are: 

Total US Stock Market Value = $59.71T

Annualized GDP = $28.56T

Buffett Indicator: $59.71T/$28.56T = 209% 

This ratio fluctuates over time since the value of the stock market can be very volatile, but GDP tends to grow much more predictably. The current ratio of 209% is approximately 67.57% (or about 2.2 standard deviations) above the historical trend line, suggesting that the stock market is Strongly Overvalued relative to GDP. 

Why Does it Matter?

The Buffett Indicator expresses the value of the US stock market in terms of the size of the US economy. If the stock market value is growing much faster than the actual economy, then it may be in a bubble.

To Read More: https://www.currentmarketvaluation.com/models/buffett-indicator.php