Financial analyst and seasoned forecaster of the US stock market Gary Shilling warns a 30% dip is on the cards. Shilling raised red flags that a potential recession could wipe away a portion of the stock market’s wealth in the US. According to his prediction, the downward spiral will be triggered by the weakening job market indicators and investors’ overconfidence.
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He pointed out a surge of investments in the stock market that made Dow Jones and Nasdaq touch new highs. The Dow Jones Industrial Average touched a high of 39,889, while the Nasdaq Composite reached a high of 16,538. Therefore, the US stock market is brimming with investments as several equities delivered massive returns.
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A 30% Crash in the US Stock Market on the Horizon, Forecasts Analyst
Shilling noted that historically such surges have often met with market correction of double digits in the US stock market. He stressed that over-investments are a cause of worry as the majority of assets could experience a bloodbath. “You look at all the kind of speculation that we’ve had out there. It’s indicative of a lot of overconfidence, and that usually gets corrected and corrected violently,” he said to Business Insider.
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The analyst was one among the forecasters in the mid-2000s who accurately predicted the subprime mortgage bubble. He now forecasts a 30% correction in the US stock market in 2024. He added that the key indicators of economic weakness include high interest rates and a weakening job market. According to him, the development is a cocktail that’s brewing for disaster in the US stock market.
In addition, he highlighted that consumer savings after the COVID-19 pandemic has depleted leading to lesser consumerism. The development would impact businesses and the chances of further layoffs in the industry increase. In conclusion, all these patterns lead to a US stock market crash of 30%. he said.