5 Stock Market Forecasts Next 6 Months

3. US Economy Headed for Recession

The US economy has remained resilient for the better part of the year, with solid economic reports depicted by substantial job numbers, retail sales growth, and waning inflationary pressures. Nevertheless, tightening credit conditions with aggressive interest rate hikes could catalyze the economy into recession in the next six months.

According to Jonathan Liang of JPMorgan Asset Management, tightening credit conditions and the fading of COVID-19 stimulus packages are putting pressure on many households.

“We think the primary driving force of that is going to be tightening credit conditions as bank balance sets particularly among US regional banks remains somehow flawed and so have to be repaired in order to get bank lending back going,” said Mr Liang in an interview with CNBC

Jason Trennert, Strategas Research Partners chairman and CEO, believes the market is yet to price in the prospect of the economy tipping into recession. Consequently, better times to absorb risk in the equity markets will exist.

Nicola Mai, portfolio manager and sovereign credit analyst, believes there is a big chance of the US and global economy ending up in a  mild recession at the turn of the new year.