Economic data may need to stabilize before the stock market can.

Goldman Sachs says stocks may not find a floor until economic growth bottoms.

Stocks are about to close out another volatile month of trading not all that far where it started.

The index is looking at a 0.9% drop for April, which is an improvement on a 5.7% March drop, thanks to calm seen in the latter half of the month. Nonetheless, many investors and Wall Street watchers remain on edge.

Goldman Sachs’ macro strategist Vickie Chang, in our call of the day warned investors to strap in, as stocks may have to fish for a lower bottom.

Some have hopefully pointed to the S&P 500’s April 8 low of 4,982 as a potential bottom. As Chang pointed out in a note Tuesday, during past corrections, troughs in economic activity could be counted to signal a floor for stocks.

“What matters now is whether the current episode is more like past ‘shock’-driven corrections where the tariff shock having seemingly peaked could be enough to mark the market bottom, or whether this will ultimately be a scenario where the economic data needs to stabilize first,” she said.

As markets are dealing with a “new kind of shock,” it’s tough to have faith that simply being through the worst will provide reassurance the worst is over for markets, she said. In episodes where the market found it tougher to track the source of the weakness, the market failed to trough until growth itself bottomed.

The strategist looked at past selloffs of more than 15%, and the macro conditions marking those bottoms. Her chart shows episodes of peak-to-trough hits of 15% or higher, categorized by relatively clear factors.

If investors can hope for a repeat of the market bottoming near the trough in economic activity such as in the past, Chang said that could happen around the third quarter of this year, based on their estimates. A recession, of course, would mean a later trough.

In a recession scenario, Chang said there’s “significant vulnerability” even if the underlying “shock” has passed, for these three reasons:

1. Shock-driven corrections have seen a “meaningful reversal,” and not just a peak in the pressure source, meaning “the tariff reversal may need to be more dramatic to be equivalent to those past peaks.”

2. The unemployment rate is crucial for risk pricing, and it’s been a good while since job losses and portfolio losses for investors happened simultaneously.

3. The 19% drawdown so far is mild relative to past recessionary drawdowns, “and would have entirely taken place before economic damage is seen, which would be historically unusual.”

Chang said putting faith in a continued market recovery from here means a stronger belief that a recession scenario isn’t setting up, and that markets can keep looking through any data weakening.

“We think the balance of risks still argues for expecting renewed declines in equity prices from current levels and for adding downside protection, especially if further relaxation makes that protection cheaper,” she said.