Economy and Confidence
62warm
Median position across economies | Data for Q2 2026
Hot and cold describe position, not good or bad: warm does not mean a fall is coming, and an extreme reading does not mean a quick reversal. We describe history only, with no buy or sell advice.
What it is
Real GDP in the US, Germany, Japan, China, the UK, South Korea, India and Taiwan, compared with the same quarter a year earlier. The headline reading is the median of their positions.
The most complete report card on the economy, but it comes out only once a quarter, later than markets move.
Real GDP compared with the same quarter a year earlier (this OECD dataset has no euro-area total, so Germany stands in for it).
Where it stands now
coldcoolneutralwarmhotHatched = earlier periods that were also warm
| Economies | Percentile | Level | Data month |
|---|---|---|---|
| Taiwan | 99 | hotat an extreme | Q2 2026 |
| India | 81 | hot | Q2 2026 |
| South Korea | 78 | warm | Q2 2026 |
| Japan | 62 | warm | Q2 2026 |
| Germany | 62 | warm | Q2 2026 |
| China | 51 | neutral | Q2 2026 |
| UK | 44 | neutral | Q2 2026 |
| US | 38 | cool | Q2 2026 |
When it was here before
US stocks after it began, cumulative1 yr2 yr3 yr
For each period, the changes 1, 2 and 3 years after it began are cumulative and measured from its first month; “What happened next” is measured from every warm month, so the two give different numbers. The events named beside each period are major events of that time, not necessarily related to the readings here.
What happened next
Bars: median cumulative changeEarlier quarters with GDP growth warm, excluding the current period (47)All quarters (184)
Median of the deepest drop below the starting month within the next 5 years: −3.8% for months with GDP growth warm; −4.4% for all months.
The warm months come from a small number of market episodes (10), and neighboring months are not independent events; rises and falls are all listed. This is the historical record, not a forecast. “US stocks” means the S&P 500 price index compiled by Professor Shiller (monthly average, excluding dividends).
| Median position | Back to neutral (40–60) | Still warm or more extreme | |
|---|---|---|---|
| 1 yr later | 56neutral | 47% | 33% |
| 3 yr later | 56neutral | 36% | 44% |
| 5 yr later | 43neutral | 45% | 17% |
Has hot or cold lined up with later returns?
1980–2021: average yearly change in US stocks over the next 5 years
In this period, the hotter the month, the lower the average over the next 5 years. The months overlap, so there are really only a few market episodes. This is a tendency, not a rule, and not a forecast.
What it is linked to
Leading indextoGDP growthCommon explanation: Knock-on · same direction
The leading index combines short-term series that turn before the economy does, so its turning points usually come a few months before GDP’s (the OECD aims for a 6–9 month lead)
One of the two has no data yet for this issue.
Weak or inconsistentAgreement +0.39 · in step in 11 of 11 5-year periods
Data and sources