The recent economic downturn caused by Covid-19 has brought concerns about the stability of global financial markets, particularly in the US. BCA Research, a Canadian investment research organization, is predicting increased volatility in the US stock market in the near future. The scars left by the Great Recession of 2008-2009 have not fully healed, and another recession could be on the horizon.
According to Peter Berezin, the chief global strategist at BCA Research, the US economy could potentially fall into a recession either this year or in early 2025. Berezin warned that if a recession were to occur, it could lead to significant challenges for investors and consumers alike. He explained that if labor demand weakens, it could lead to lower wage growth and falling job openings, resulting in economic instability.
Berezin also highlighted concerns about inflation and unemployment as measured by the Phillips curve. He explained that while the US economy has been able to avoid a recession in recent years due to its operation along the steep side of the Phillips curve, if labor demand weakens, it could lead to an increase in unemployment and inflationary pressures which could result in further economic challenges.
In addition to domestic concerns, Berezin also predicts a notable slowdown in economic growth in China and Europe which could put pressure on international stock markets. The recent drop in the Dow Jones Industrial Average from its record high of 40,000 mid-May reflects uncertainty and volatility in the market.
Overall, investors will need to closely monitor market trends and make informed decisions to navigate potential risks and opportunities ahead as there are significant challenges ahead for both US and global economies