The S&P 500 is set to take a major hit in 2025, with a predicted 32% plunge as a recession finally hits the US economy, according to BCA Research. The firm’s chief global strategist, Peter Berezin, has issued a stark warning that the Federal Reserve will fail to prevent the impending economic downturn, leading to a significant drop in the stock market.
Berezin’s analysis suggests that the US economy will enter a recession later this year or in early 2025, with growth slowing not only domestically but also globally. The strategist believes that the Fed will be slow to cut interest rates, only taking action once a recession is already underway, which will be too late to prevent the impending crash.
One of the key factors contributing to Berezin’s bearish outlook is the weakening labor market, with job openings declining and signs of a slowdown in hiring. Rising unemployment and constrained credit availability will likely lead to a reduction in consumer spending as households prioritize building up savings and struggle to access credit.
As a result, a negative feedback loop is expected to develop in the broader economy, leading to further declines in spending, hiring, and income growth. Berezin also highlights the limitations of the Fed’s ability to stimulate the economy through interest rate cuts, as the actual rates paid by consumers and businesses may not decrease significantly.
Overall, Berezin’s predictions paint a grim picture for the US economy and the stock market in 2025, with significant challenges ahead that could have far-reaching implications for investors and the broader financial system.
