Is the Buffett Indicator thru the roof?

by onfallen

Figured out something interesting; let’s discuss.

Assumptions:

  1. US GDP will fall by X percentage this year
  2. GDP 2019 is $21.73 Trillion
  3. Total market cap is $28.48 Trillion
  4. Buffett indicator = market cap / gdp

Scenarios:

X – Buffett Indicator

5% – 138%

10% – 146%

15% – 154%

20% – 164%

25% – 175%

For reference,

dot com bubble height: 140%

2008: 107%

2020 All time high: 151%

The question, to economists, what is a reasonable estimate of GDP decline given the composition of US economy? Would that number make Buffett indicator go thru the roof?