Legendary Economist Foresees 30% Drop In Stocks, Predicts Recession And Fed's 'Credibility' Issue

Esteemed economist Gary Shilling has issued a stark warning of a potential 30% drop in stocks, an impending recession, and a bubble in the commercial real estate market on the brink of bursting.

According to a report by Business Insider, Shilling, known for accurately predicting the 2008 housing market crash, made these predictions on “The Julia La Roche Show.” He also forecasted that the Federal Reserve would conquer inflation and start slashing interest rates by next year.

Shilling anticipates a further 30% decline in stocks, signifying an overall decrease of 40% from peak to trough. This suggests the S&P 500 could fall to around 2,900 points, its lowest level since the pandemic.

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Shilling asserted that the Federal Reserve was late in addressing inflation, leading to a credibility issue.

“They realize that if they don’t, their credibility will be very seriously impaired, and they’ll have a much tougher time later,” he said.

He also mentioned that a recession is likely imminent, as indicated by the inverted yield curve, leading economic indicators, and the Fed’s fight against inflation. Shilling also warned of a bubble in the commercial real estate sector, which he believes is beginning to crack.

Shilling’s grim outlook on the market landscape has raised concerns among investors, as they brace for potential economic turbulence in the coming year.

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