Recession. For those who have been around long enough, recessions at periodic intervals have become a fact of life, from the Japanese stock-market crash in 1990 to the 2008 financial crisis to the pandemic. Now, whispers of another are getting louder.

How can you tell a recession is on its way—and ready to hit the art market? One dealer told us recently at Paris+ that the canary in the coal mine is when collectors stop buying sculpture. Earlier this week, veteran auctioneer and Artnet News Pro columnist Simon de Pury remarked in The Hammer that “when the general mood completely switches it can also alter the mood of the super rich,” and an early indicator of hard times to come is when the ultra-wealthy stop bidding generously at charity auctions.

Though de Pury, at least, sees no cause for the art market to worry just yet, the prompt led us to ply more of our sources for their own harbingers of recession. How can you tell the market is in for one?

Here’s what they said. 

People Are Talking About It

In thinking about your question, my brain took poetic license with an old Tracy Chapman song: “Don’t you know, they’re talkin’ about a re-ee-ee-cession? It sounds like a whisper.” The most telltale sign is that everyone is murmuring about it sotto voce—at openings, art fairs, gallery dinners…everywhere. But I remain optimistic that whatever hiccup might—might—be coming will pass after a few diaphragm-like spasms and the art market will continue to regular breathing from even greater heights.

 —Liz Parks, art advisor

More People Are Asking for Discounts

I look at economic data, and swings in the stock market will affect peoples buying decisions before they, for example, get to Miami. That’s always an indicator for me because I think that when people think they’re flush, or they have unexpected money where something grew more than they thought it would, they spend it more freely. When it seems like free money. That’s something I always monitor. Other indicators are exhibitions taking longer to sell, people asking for more discounts. 

—Mills Morán, gallerist 

There Is a Suspicious Lack of Underbidders

First and foremost, I remove the buyer’s premium and only measure hammer results against estimates. I also add back in the withdrawn lots to fully judge sale performance. Following that, it’s noting the number of underbidders, particularly for lots with third party guarantees; when in doubt, I rewatch lots on Youtube. And finally, the day sales which are often the canary in the coal mine.

—David Norman, auction veteran turned private dealer

Everything Is Guaranteed Pre-Sale

I usually look at the level of investment by auction entities in house and third-party guarantees.  They have the most comprehensive and timely art market and buyer information. As auction guarantees are offered up to six months prior to the sale I watch to see how much is invested and then sold off to get the best indicator in the health of the market. 

Auction houses can significantly move their profitability through guarantees in their evening sales. The ability to retain full buyer’s premium and participate in upside above the guarantee on high performing evening sale lots is a game changer to boosting profitability and offsetting risk.

—Caroline Sayan, former Christie’s exec now President and CEO, North Americas, Cadell & Company

Collectors Stop Betting on Young Artists

I think collectors taking risk on younger artists is an indicator too. I see less risks as I notice the market is swinging downwards. When the market is good, you see people taking more risks on younger artists.

—Nicelle Beauchene, gallerist

Buyers Fly to the Blue-Chip

The world is at a turning point due to numerous economic and geopolitical uncertainties, which is why collectors focus on buying blue-chip art. Established art acts as a safe haven for value preservation in uncertain times like this. The massive success of the record sale of the Paul Allen Collection with blue chip art is the evidence of that.

—Thomas Stauffer, art advisor and art advisor and co-founder of Gerber & Stauffer Fine Arts, Zurich

The Day Sales Start to Stink

Results of day sales at auctions are the best reflections of the market sentiment. The differences between the final sale price and the presale estimates of individual lots best indicate whether the market is pessimistic. Recent sales results show that market is more rational than before, and people are buying art within a budget.

—Gladys Lin, art advisor

The Speculative Bubbles Start to Burst

The price of a thing is a claim about the supply and demand for it. If demand for something goes up, so does its price—and demand is simply a trade-off of greed and fear. Why has there been so much greed in the art market lately? Because there was so little fear. There were implicit guarantees all over the system that made even outlandish prices in art look safe—0 percent interest rates, the Fed printing money at a heretofore unimaginable velocity, and lax government taxation of the wealthiest among us.

All of this recent surplus cash, redirected into speculative purchases such as art, creates bubbles. Therefore, the most important condition of this recent art market boom is not internal at all, it has nothing to do with the quality of art, artists, or collectors; rather, it is the external need of ultra-high-net-worth individuals to find an efficacious place to store their excess capital. If art prices rise so high they suffer a confidence collapse, or if other investment opportunities emerge that offer better appreciation, demand will fall.

—Todd Levin, art advisor

Actually… It’s Impossible to Predict

To truly ascertain a recession in the art market one would need to analyze a set of data about the total goods and services produced in a given time period and then measure against total consumption all while considering inflation. Since art cannot be shoved into data sets accurately because we are talking about measuring the “aura,” then it’s a waste of time to think about it.

—Lisa Schiff, art advisor