Despite another round of record highs on Wall Street, a growing number of economists and market strategists are warning that the U.S. economy may be entering a far more fragile period than stock indexes suggest.
Economists from JPMorgan, Moody’s Analytics, and Evercore ISI have raised concerns about rising inflation, weakening consumer purchasing power, and the economic impact of elevated oil prices tied to the ongoing conflict in the Middle East. Moody’s chief economist, Mark Zandi, recently warned that recession risks have climbed to 40%, noting that many Americans are already living paycheck-to-paycheck as real, disposable income stagnates. Meanwhile, JPMorgan economists say the market’s hoped-for “Goldilocks” scenario of cooling inflation and steady growth now appears extremely unlikely.
Also, market veterans are sounding alarms about stock valuations. Investor Michael Burry, known for predicting the 2008 housing collapse, warns that today’s AI-driven rally resembles the late stages of the dot-com bubble. Economist Gary Shilling is echoing similar concerns, pointing to historically high valuation metrics and predicting that the S&P 500 could soon face a correction of 20 to 30%. While analysts differ on the exact timing, many agree that rising energy costs and slowing consumer and business spending could create serious headwinds for financial markets later this year.
In times of economic uncertainty, consumers have historically turned toward assets that are viewed as more stable. With inflation pressures rising and recession fears growing, some buyers are increasingly looking at physical gold as a way to help diversify portfolios and preserve purchasing power.
