---
title: "Downside Risk to the Stock Market and Consumption"
authors: "Indrajit Mitra; David Rapach"
source: "Federal Reserve Bank of Atlanta — Policy Hub paper"
source_url: "https://atlantafed.org/research-and-data/publications/policy-hub-papers/2026/09/02/06-downside-risk-to-stock-market-and-consumption"
paper_id: "atlanta_fed_policy_hub_downside_risk_stock_market_consumption_2026"
harvested: 2026-09-29
year: 2026
keywords: [equity risk, consumption, downside risk, asset prices, sentiment]
kind: reference
topic: "equity and consumption risk"
added_by: stratmac
added_date: 2026-09-29
pdf_url: "https://www.atlantafed.org/-/media/Project/Atlanta/FRBA/Documents/research-and-data/publications/policy-hub-papers/2026/09/02/06-downside-risk-to-stock-market-and-consumption.pdf"

## Summary

Atlanta Fed Policy Hub paper, 2026-09-02 (PDF deposited alongside this entry,
998,588 bytes, verified HTTP 200 on 2026-09-29). The AI boom has lifted equity
valuations sharply and raised bubble concerns. Mitra and Rapach analyse the factors
that would generate *downside* risk to the stock market should investor sentiment
turn decidedly more negative and drive equity prices down sharply — and, from there,
the downside risk that transmits to US aggregate consumption.

## Why it belongs here

Bears on the equity and consumption cards, and on the house-view question of whether
an equity drawdown is a consumption event in the current cycle. The framing is
one-sided risk (downside), which is the same modelling choice the SM dashboard makes
when it flags a signal by threshold rather than by symmetric deviation.

## Provenance

Title, author list and date from the Atlanta Fed Policy Hub notification email of
2026-09-02 and the live page (HTTP 200). The description sentence above is the
publisher's own summary, carried verbatim in the notification. No estimated
probability or elasticity is quoted here — the magnitudes are in the paper and have
not been extracted; anyone citing a number from this must read the PDF first.