Despite a stock market that’s less than 1% away from record highs, bearish forecasts are out in full force, with top economists and portfolio managers warning of everything from an imminent recession to the potential for a 65% stock-market crash. These forecasts, while bold, are causing investors to take notice and consider potential risks in an otherwise bullish market.
Gary Shilling, a Wall Street veteran known for correctly identifying the US housing bubble in the mid-2000s, is predicting a recession by the end of the year, which could lead to a 30% stock market plunge. Shilling’s concerns stem from signs of weakening in the labor market, which he believes could shake investor confidence and trigger a significant market downturn.
John Hussman, president of the Hussman Investment Trust, is issuing a warning of a potential 65% stock-market crash, drawing parallels between current market conditions and those seen before the 1929 Great Depression. Hussman’s bearish outlook is based on extreme valuations and unfavorable market internals, which he believes could lead to a major correction in the stock market.
BCA Research strategist Roukaya Ibrahim is also sounding the alarm, predicting a 30% stock market decline sparked by a recession in early 2025. Ibrahim points to elevated stock valuations and decelerating growth as key factors that could lead to a significant market correction in the near future.
David Rosenberg, a top economist, is warning that the US economy may be “sleepwalking” into a recession as the labor market shows signs of weakening. Rosenberg highlights a downshift in economic data and manufacturing activity contraction as indicators of a potential economic downturn on the horizon.
While these bearish forecasts are causing concern among investors, there are also voices of optimism in the market. Market veteran Ed Yardeni, who has been consistently bullish in recent years, believes that the economic doomsayers may be premature in their recession predictions. Yardeni points to record-high corporate profit estimates as a sign of a solid labor market and economy, suggesting that a significant downturn may not be imminent.
As investors navigate the mixed signals in the market, it’s clear that the debate between bullish and bearish outlooks continues to shape investment decisions and market sentiment.
