The current market pressure is still at a normal level according to Goldman's newly released financial stress index.

Goldman said it had unveiled a new financial stress index (FSI), which, while it has tightened over the past two days of market turmoil, remains at a relatively normal level by historical standards. The index tightened mostly due to a surge in expected volatility in equities and bonds, and the short-term funding markets have remained stable, Goldman economists said in a note to clients.

“Thus, while market stress has clearly increased from a week ago, our FSI does not yet show the severe market turmoil that would force policy makers to intervene,” the note said.

The FCI, which measures the health of the financial system, is not designed to measure market stress, and the FSI will be used to monitor the risk of market dysfunction. The FSI includes the US and international short-term funding market spreads, US Treasury swap spreads and credit and equity financing costs, in addition to expected bond and equity volatility.

The FSI, unlike the similar stress index maintained by the Federal Reserve Bank of St. Louis and Kansas City, will be released daily.

“We estimate that a 10% further decline in the stock market would imply a 45bp hit to US GDP growth next year,” the note said.

The report said: “The total hit is about 85bp if we include the other asset classes. These are usually sold off when growth concerns arise.” Goldman added that a further large-scale sell-off would be needed to “nudge” the economy into recession if the initial growth rate was above 2%.