Discretionary / Staples Ratio

When consumers brace for harder times they cut the discretionary purchases first — new cars, home improvement, travel, dining — while staying current on staples like food and household goods. The stock market prices that rotation early, so the ratio of consumer-discretionary to consumer-staples sector performance has tended to roll over months before the consumer pullback shows up in spending data, ahead of the 2008 and 2020 downturns. It's the one recession signal on this dashboard that reads the equity market's own sector positioning rather than yields, credit spreads, or surveys — a different transmission channel than the VIX, GZ, and ANFCI cards, and a forward-looking complement to the consumer-stress reads on the Consumer Sentiment, Real Retail Sales, and Credit Card Delinquency cards. The line is the equal-weighted RSPD/RSPS ratio, which begins at those funds' November 2006 inception. Equal-weighting is what makes it a consumer read: cap-weighted discretionary is now close to half Amazon and Tesla, two names whose prices move on cloud, AI, and narrative rather than on the consumer cycle, and over the years both versions exist the cap-weighted ratio barely tracks the unemployment rate while the equal-weighted one does. An earlier version of this card extended the history back to 1998 with the cap-weighted XLY/XLP ratio, which meant equal-weight observations were being ranked against a cap-weight distribution — two different measures sharing one percentile. Dropping that backfill shortens the record to 2006 but makes every reading comparable to every other. It lowers the current print by roughly ten percentile points and leaves the 2008 and 2020 extremes where they were. The overlaid 200-day moving average is the line to read against the recession bars — the raw daily ratio is too noisy to interpret directly. Read direction-of-travel over levels: a ratio grinding lower while the moving average turns down is the configuration that has preceded consumer-led slowdowns, most reliably when the consumer-stress cards are deteriorating at the same time.