The recent economic downturn due to Covid-19 has added to the woes in the United States, and the aftermath of the Great Recession of 2008-2009 is still not fully recovered from. As a result, concerns about the stability of financial markets are resurfacing. A report by Fox Business has predicted volatility in the US stock market in the days ahead, with BCA Research’s chief global strategist Peter Berezin warning clients that a recession could occur either this year or in early 2025.
According to Berezin, if a recession were to occur, it would lead to a significant drop in the S&P 500 index, marking a 30% decrease from current levels. His prediction is based on the assumption that slowing down significantly in the labor market will put strain on consumer spending, which is a key driver of economic growth. However, he also considers other factors such as inflation and unemployment as represented by the Phillips curve.
Berezin points out that while China and Europe have shown some signs of recovery from their economic downturns, they still face challenges in terms of their economies. These challenges could impact global economic growth and put pressure on international stock markets. Despite this uncertainty, some investors are still bullish on Wall Street as they see potential for growth opportunities in various sectors such as technology and renewable energy.
