One of Wall Street’s veteran economic forecasters will be toning down his economic growth forecast.
The Economic Cycle Research Institute’s Lakshman Achuthan told CNBC his leading indicators are pointing to a slowdown which’s picking up momentum — highlighting one particular trend from the latest unemployment rate chart which supports his case.
“What genuinely caught our eye, will be which unemployment rate — where the idea’s just flat-lined since October,” the firm’s chief operations officer said Friday on CNBC’s “Trading Nation.”
He contended the idea doesn’t fit within the narrative of the United States’ strong growth story.
His thoughts came as the Dow Jones Industrial Average was from the process of closing in correction territory — around 10 percent off its all-time high. He believes Wall Street will be finally starting to realize the economy will be not as strong anymore.
Achuthan isn’t the only one. Guggenheim’s head of investing sees a tough road ahead for the market in addition to also economy, which has a sharp recession in addition to also a 40 percent decline in stocks looming.
Scott Minerd, who warned clients in a recent note which the market will be on a “collision course with disaster,” told CNBC on Friday he expects the worst of the damage to start in late 2019 in addition to also into 2020. Along with the decline in equities, a rise in corporate bond defaults will be likely as the Federal Reserve raises interest rates in addition to also companies struggle to pay off record debt levels.
“When we look at what may be the backdrop for all the jitters which are going on, we would certainly point to a not bad old fashioned slowdown from the economy which will be coming onto people’s radar just around right now,” Achuthan said.
yet don’t mistake Achuthan for being permanently bearish. He was a self-proclaimed “super bull” following the 2016 presidential election, as recession chatter was heating up.
“Last fall, the same leading indicators which anticipated the synchronized global growth which we all enjoyed last year in 2017, they turned over,” he added.
He isn’t calling for the economy to tank anytime soon. yet with every passing month without a pickup in growth, Achuthan warns the economy will be less equipped to deal which has a negative shock such as a potential trade war. So, he’s urging stock market investors to be vigilant.
Achuthan recommended retail investors should consider buying the 10-Year Treasuries the next time yields reach 3 percent, as leverage against downturn risks.
–CNBC’s Jeff Cox contributed to This kind of article.