The Russell 2000 has lost roughly 18% of its value peak to trough, and that is not good news for the US economy.

During the past twenty years, coincident and lagged values of the index have been a reasonably good predictor of GDP. In the regression below I use a polynomial distributed lag of quarterly changes in RTY vs quarterly changes in real GDP (coincident and four quarterly lags).

RTY  gives somewhat better results than the S&P 500. This is far from perfect but close enough to merit attention.

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