However disconcerting the volatility of the stock market this year has been, a quick look back at past bear markets shows that the current peak-to-trough decline in the S&P 500 has so far been relatively tepid. The fact is that despite what may be taking place under the surface, the S&P 500 has still only fallen by 18%, and as such, this does not yet qualify it as an “official” bear market, where a decline of at least 20% is needed.

In this Economics Weekly, we present some thoughts about the current market volatility, with the view that as long as financial conditions continue to tighten and the risk of recession is rising, markets will remain volatile.

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Richard de Chazal, CFA, is a London-based macroeconomist covering the U.S. economy and financial markets.