Curated by: Business desk
Latest version: November 22, 2023, 10:58 IST
Schilling founded his financial consulting and investment advisory firm in 1978.
The American economy is the largest in the world, and its fluctuations have a significant impact on the global economy and stock markets.
Noted economist Gary Shilling, famous for his accurate predictions, recently expressed concern about a possible recession in the United States. Schilling, known for predicting a 2008 recession in the American real estate sector, expressed his fears on The Julia La Roche Show, indicating that the Federal Reserve may plan to cut interest rates next year to combat inflation.
His latest warning centers around the rise of commercial real estate, which could cause the shilling to collapse, triggering a significant recession. According to him, its impact could cause a significant 30% drop in the stock market.
Schilling predicted a possible 30% to 40% decline in stocks from their peak, suggesting that the US S&P 500 index could fall to around 2,900 points, the level reached since the COVID-19 pandemic.
While Schilling acknowledged that the US is not currently in a recession, he emphasized the possibility of one emerging without clear warning signs. Analyzing key indicators linked to an economic slowdown, Schilling’s cautionary words echoed concerns about the resilience of the US economy.
Given the global impact of the US economy, Schilling’s predictions carry weight. The 2008 US recession, for example, had a profound impact on global stock markets, including in countries like India.
Schilling, the founder of his economic consulting and investment advisory firm in 1978, notes that corporate profits drop significantly during recessions, often leading to a corresponding decline in stock prices.
Currently invested in Treasury bonds and the US dollar, the shilling is shorting copper and taking positions against stocks through exchange-traded funds and commodities. As investors digest the shilling’s warning, financial markets are bracing for possible swings amid economic uncertainty.
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