Crossmark’s Doll Projects Long-Predicted Recession to Materialize in 2024

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.