Just when we thought we were out of the economic woods with a strong report on April jobless claims (lowest since 1973), there came the 1Q GDP report showing anemic growth of 0.5%. That was enough to send equities down over 1% for the week.

This good news-bad news pattern is discouragingly familiar to market observers. No sooner does momentum of a real recovery in the US economy seem to take hold, when it gets knocked back by recession-ahead warnings.

Yet among some cognoscenti in capital markets, the economy’s lack of clear direction points to opportunity in private credit. According to Christopher Godfrey, a partner at CEPRES GmbH, private credit has performed well in down markets. “When stock markets go down, everyone gets nervous,” he told us. “That impacts the buyout market as well as traditional financing. That’s when the banks pull back.”

Backed by the firm’s data reporting that goes back to the 1970’s for private equity and mid 1980’s for private credit, CEPRES sees a direct correlation between buyout and public markets. During the boom years, buyout pricing tracks to stock markets, Godfrey says, and there’s plenty of financing available. During volatile times, traditional credit sources dry up and private debt steps into the vacuum at better yields.