An interesting debate taking place right now (November 2022) relates to whether the equities market has already priced in a recession, and is now moving up into what could be a new bull market. This could mean that the forward-looking equities market, represented by equity indices (e.g., Wilshire 5000, S&P 500), has bottomed before a recession.
I have conducted a rather extensive review of various equity indices to see if there is a historical precedent, prior to November 2022, for an index that has bottomed before a recession. I could not find any. The figure below (source: Federal Reserve Bank of St. Louis) shows the Wilshire 5000, which covers all American stocks.
The figure shows two areas where the index bottomed after a recession and during a recession. These are only illustrations of a broader pattern - I could find no instance in which a bottom occurred before a recession, in any index (including the S&P 500). So, do equity indices bottom before recessions? Apparently not. The video linked below discusses this and other cases in more detail.
