Overview
- The Walmart Recession Signal, which tracks Walmart versus the S&P Global Luxury Index, was reported Tuesday at its highest reading since 2008 as Walmart extended its outperformance.
- Walmart shares are up about 11% this year while the luxury index is down roughly 15%, a gap Paulsen says shows consumers cutting discretionary buys and shifting to budget options.
- Paulsen expects a marked slowdown rather than a 2026 recession, yet he warns that pressure is building fastest on lower- and middle-income households.
- He links the gauge to later rises in unemployment and to fragility in private credit markets, raising the risk of job losses and tighter lending if stress spreads.
- Recent drivers include a weak February jobs report, cost spikes tied to the Iran war, and sour sentiment, with Moody’s lifting 12‑month recession odds to 48.6% alongside higher estimates from Goldman Sachs and EY‑Parthenon.