The economic downturn caused by the Covid-19 pandemic has added to the scars left by the Great Recession of 2008-2009, leading to concerns about the stability of global financial markets. BCA Research, a Canadian investment research organization, is predicting increased volatility in the US stock market in the near future. According to Fox Business, chief global strategist Peter Berezin has warned clients that the US economy may fall into a recession either this year or in early 2025, leading to a potential 30% drop in the S&P 500.
Berezin’s prediction is based on the expectation of a notable slowdown in the labor market, which could impact consumer spending, a key driver of economic growth. He suggests that the relationship between inflation and unemployment, as measured by the Phillips curve, could lead to economic challenges in the US and globally. This includes slow growth in China and Europe, which could put pressure on international stock markets.
Despite reaching a new record high in mid-May, the Dow Jones Industrial Average has since dropped from those peaks. Berezin’s prediction stands out as one of the most pessimistic on Wall Street, following a turbulent year for the market. If his forecast comes to fruition, it could have significant implications for the global economy and investment landscape.