Media keep saying that we may go into a recession. But all such reports keep forgetting that we are already in one, and the Biden Admin decided to change the definition of a recession to help him look better. But seriously, if Biden tomorrow declares that we have the greatest economy the world has ever seen, and he then changes the definitions again, these folks, I feel, would all be touting the wonders we are all not seeing right now. Welcome to Soviet America in 2024. But let’s play along with media…
According to a recent analysis from BCA Research, the U.S. economy ‘might’ be heading toward a recession by late this year or early 2025. Peter Berezin, the chief global strategist at BCA Research, conveyed this warning to clients, highlighting a potential significant downturn in the stock market. This analysis challenges the more optimistic views that have prevailed recently among investors.
Berezin’s projection centers on a slowdown in the labor market, which he anticipates will reduce consumer spending, a crucial engine of economic growth. He argues that recent stability was maintained because of favorable conditions on the “Phillips curve,” a concept used to describe the inverse relationship between rates of unemployment and corresponding rates of inflation in an economy. According to Berezin, the U.S. managed to dodge a recession in the previous years due to beneficial dynamics along this curve, which allowed for disinflation without significant job loss.
Brace for impact! 📉 BCA Research predicts a 30% plunge in S&P 500 amid recession fears. Rate hikes and trade wars spell trouble. 👀 Will your portfolio withstand the downturn? #StockMarket #Recession2024 pic.twitter.com/srfrA0gPKl
— Money Masters (@MoneyMasterss) June 27, 2024
However, if labor demand weakens, this could lead to lower wage growth and a reduction in job openings, rather than an increase in unemployment, a scenario Berezin refers to as “immaculate disinflation.” Despite these softer labor conditions potentially easing inflation, the broader impact could be detrimental to the overall economic climate.
Berezin also noted that this slowdown is not limited to the United States; he expects economic growth to decelerate in Europe and China as well. Such a global downturn would likely exert further pressure on international markets and economic stability worldwide.
Brace for impact? BCA Research strategist Peter Berezin predicts a 30% drop in the S&P 500 as the U.S. economy heads for a recession, potentially impacting global markets. #StockMarket #Recession #EconomicOutlook pic.twitter.com/Vtk8OQefIU
— Alex Forbes (@AlexForbesUK) June 29, 2024
Despite these warnings, the stock market has shown robust performance recently. The S&P 500, after a significant drop in mid-2023, has rebounded impressively. It recorded a more than 29% increase from its lowest point at the end of October to now. Currently, it’s up about 15% since the start of the year. Similarly, the Dow Jones Industrial Average and the Nasdaq Composite have seen rises of 3.7% and approximately 20%, respectively, over the same period.
This recent recovery in the stock market might give some investors a sense of security, however, Berezin’s forecast suggests that this optimism could be premature. His perspective is one of the more pessimistic on Wall Street, especially following a year marked by significant volatility triggered by fears of high and sustained interest rates.
If Berezin’s predictions hold true, the implications for the market are stark. He suggests that the S&P 500 could see a drop of up to 30% from its current levels, a prediction that points to a potential valuation around 3,750 points in the face of a recession. If I were you I would be investing in Gold ASAP. Just like the big banks of the world. They are all heavily investing in Gold in preparation.
Key Points:
i. BCA Research predicts a U.S. recession by late this year or early 2025, with significant impacts on the stock market.
ii. Chief global strategist Peter Berezin links the potential downturn to a slowdown in the labor market affecting consumer spending.
iii. The U.S. has avoided a recession recently due to favorable conditions along the Phillips curve, facilitating immaculate disinflation.
iv. Economic slowdowns in Europe and China could exacerbate global economic challenges.
v. Despite a strong market recovery in the past year, BCA suggests a potential 30% drop in the S&P 500 if recessionary pressures materialize.
James Kravitz – Reprinted with permission of Whatfinger News
