Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.
Client Service January 3, 2024
Crossmark’s Doll Projects Long-Predicted Recession to Materialize in 2024
Market forecaster Bob Doll believes a shallow recession is due, given lagging effects of monetary tightening.
Reported by Natalie Lin
Crossmark Global Investments Chief Investment Officer Bob Doll released his 10 market predictions for 2024, which include: the risk of recession, inflation remaining sticky and above target, and overall weaker economic activity.
In the annual forecast, Doll highlighted that central banks aim for a “soft landing” this year, to prevent a crash or recession. He says the consensus view for 2024 is a “Goldilocks” scenario—neither too hot nor too cold—with expectations of a gentle economic landing, a continued decline in inflation and double-digit earnings growth. But he believes otherwise.
“We think that fairy tale is unlikely, meaning either 1) the economy weakens enough for a bumpy ride (perhaps a recession) and earnings fall short (most likely), or 2) the economy remains strong enough to support double-digit earnings growth at the risk of little progress on inflation and Fed rate cuts,” he stated.
Although the U.S. economy sidestepped a predicted recession last year and made progress toward a soft landing, Doll suggested that the long-anticipated downturn may manifest this year but will likely be brief and shallow. The primary factors pointing toward a recession include the delayed impact of monetary tightening by both the Federal Reserve and long-term interest rates.
“Can a productivity boom rescue the U.S. via AI [artificial intelligence], automation and robotics?” Doll wrote. “Only time will tell.”
Doll’s full list of 10 predictions is:
- A slight economic downturn occurs, as the unemployment rate surpasses 4.5% in the U.S.;
- The 2% through 3% inflation range, a ceiling in the 2010s, becomes the floor in the 2020s;
- The Federal Reserve cuts rates fewer times than the six suggested by the Fed funds futures curve;
- Credit spreads widen with declining interest rates;
- Earnings growth falls below the double-digit percentage consensus expectation;
- Stocks reach a new all-time high early in the year but experience a subsequent decline;
- Energy, financials and consumer staples outperform utilities, health care and real estate;
- Faith-based industry assets under management share increases for the eighth consecutive year;
- Geopolitical crosscurrents multiply but have minimal impact on markets; and
- In November, the White House, Senate and House all switch parties.
Doll said five of his 10 annual investment predictions for 2023 came true amid what he called a challenging year for investors. He said last year’s forecast yielded one of his “worst years,” below his average of 7.0 to 7.5 over 30 years of predictions.
