Recession, 20% Stock Market Plunge Likely by Year-End: Gary Shilling
Business Insider • • business
Key Points:
- Economist Gary Shilling predicts an almost inevitable US recession in 2024, citing vulnerabilities in housing, capital expenditures, and consumer spending as key indicators of economic downturn.
- Shilling warns of a potential 20-30% correction in the S&P 500 by the end of the year, driven by historically high stock valuations measured by metrics like the Shiller CAPE ratio, price-to-sales, and price-to-book ratios.
- The housing market remains weak due to elevated interest rates, while overall business capital expenditures have significantly declined despite growth in AI-related investments.
- Consumer spending, which accounts for about two-thirds of US economic growth, is expected to weaken amid rising energy prices and slowing growth in real disposable income and personal savings rates.
- Shilling sees limited chances for avoiding recession unless there is unexpected fiscal stimulus or sustained consumer strength, both of which he considers unlikely.
