- One of the few Bears in Wall Street thinks the economy risks seeing a period of staggation by the end of the year.
- Adhesive inflation and slower growth can arouse a 10% stroke of stock prices, Stifel Barry Barry Barry said.
- Bannister told about early trend signs, such as the productivity of dimming and increasing wages.
SH.BA risks encountering what some predictors say is a worst case scenario for the economy in 2025-a situation that can cause a 10% stroke of stock prices, according to the high strategist of Stiffel.
Barry Bannister, the managing director and the main capital strategist in the firm, was one of several bears in Wall Street that went this year, predicting that S&P 500 would end 2025 among 5000.
He says he sees the danger of the US economy entering a period of soft staggation until the second half of the year. This refers to a scenario where inflation remains contagious while economic growth slows down – a dynamic that without prices and unemployment grow in the 1970s.
Bannister told Business Insider there are early signs that dynamics are taking shape, despite the fact that most investors generally expect another strong year of growth and for inflation to continue cooling to 2025.
Inflation, for one, has accelerated in recent months. Consumer prices increased 3% from year to year in January, on estimates and above inflation rate 2.9% of December.
Investors have been concerned about the appearance of inflation in recent months, despite rising prices, slowing down significantly since mid -2022.
Some of the concerns are due to President Trump’s economic policies, Bannister said, showing Trump’s tariff plan, which forecasters have announced can spend pricing on consumers.
“I think it’s folly that people assume that inflation is falling to 2%. It will not turn 2%, not without a recession,” Bannister said, showing the impact of price tariffs later. “Tariffs undo too much disinflation.”
In one note, Stiffel’s analysts said they expected the personal inflation consumption costs, FED’s favorite inflation meter, to remain “stuck” at about 2.75% in 2025, on the 2% target of the FED.
Inflation also predicts bad news of economic growth, given that its impact on consumers, Bannister said.
Consumer spending powers about 70% of GDP in the USA. Meanwhile, households are already showing signs that are starting to withdraw, with retail that falls nearly 1% from January, according to data from the Department of Trade.
In the meantime, growth can be stumbled on this year. Average real per hour profits for all private sector workers increased 4% throughout the year in January, according to the Bureau of Labor Statistics, from an 8% increase in year by year 2020.
Increasing the productivity of the worker has been in the tendency for most last year, too. Production per worker in the non -pharymic business sector increased only 1.5% in the fourth quarter, from a 7% roof of productivity increase in 2020.
“I think what there is there are many armchair economists who simply assume that productivity will grow. They are lacking the cyclicalness of productivity, which is already fading,” Bannister said.
The result can be an ugly Feedback loop: WANING PRODUCTIONY predicts bad news for inflation, as businesses that get less from workers can influence them to raise prices. Meanwhile, high inflation can prevent the FED from lowering interest rates, which can damage economic growth, Bannister said. He added that he did not expect the Fed to lower interest rates further this year.
All of this is a negative market, where investors have appreciated the continued economic strength and lower borrowing costs.
The shares require a correction to begin, Bannister said, showing historically high ratings. He expects the combined head of slower growth and higher rates to arouse a 10% sale somewhere in the second half of the year.
“He says I immerse at 5,500 at the end of the year as this slowdown combined with contagious inflation puts Fed on a link,”
He said, referring to the bank’s forecast for S&P 500.
Other predictors have also marked the risk of staggling between an uncertain perspective on prices and trade policy.
Mark Malek, leading investment official in the Siebert Financial, told Bi that he saw staglat as a risk to the economy, although it was not his basic case for what could happen in 2025. This is largely due to the risk that Tariffs push the highest prices, which can put enough pressure on consumers to ignite an economic slowdown, he said in an interview earlier this month.
“It’s not a word I like to bring often, but we’re starting to see now the realities of these potential draconian tariffs, right? They’re not small fees,” he told a staglati scenario. “You have inflation pressure, and then on the other side of it, you have a situation where you have the potential for an economic slowdown.”
BCA Research said also without the risk of a “mini stagflation” event due to increased slowdown of economy and inflation that climbed close to 3% throughout 2025. The scenario may be promoted by stagnation of labor supply increases, growth growth of productivity and the remaining prices and prices set up in the US, Dhaval Josi, a strategist in the firm, wrote in a note.