Noted economist Steve Hanke has made predictions for the end of 2024, foreseeing a recession, a stock market downturn, and inflation falling below 2%. Hanke, a professor of applied economics at Johns Hopkins University, believes that the stock market is currently overvalued and will likely see a decline as the anticipated recession begins to impact. He suggests that stocks, usually valued at multiples to company earnings, will drop during a recession due to decreasing multiples and reducing earnings.
The S&P 500 index, which experienced a 24% surge in 2023, is currently trading near an all-time high. However, Hanke warns that the multiples of stocks are expected to come off as the recession starts to bite. Hanke, who has served as an economic advisor to Ronald Reagan and was the president of Toronto Trust Argentina in 1995, attributes the recent unstable inflation to alterations in the U.S. money supply rather than supply-chain disruptions or variations in energy and metal prices.
Hanke, along with colleague John Greenwood, anticipates that headline inflation will dip below the Federal Reserve’s target rate of 2% by the end of 2024. They propose that a 6% annual growth in M2, a broad measure of money supply, would likely keep inflation around the 2% level. In December, Hanke and Greenwood warned that the U.S. economy was “running on fumes” and “on schedule to tank” due to a substantial decrease in its money supply since March 2022. Hanke has previously raised alarms about the potential for a market downturn and a recession.
Hanke’s predictions come at a time when the world’s top investors are growing more confident that markets won’t be hit by a recession in 2024, with a majority now supporting the likelihood of a “soft landing” for the U.S. economy. Despite this optimistic sentiment, concerns about a potential recession have led some investors to explore alternative investment strategies, such as diversified real estate investments, as a hedge against potential economic downturns.
It is important to note that Hanke’s predictions are based on his analysis and expertise as an economist. While his opinions carry weight, it is always wise for investors to conduct their own research and consider multiple perspectives before making any financial decisions.
In conclusion, Steve Hanke’s predictions for the end of 2024 include a recession, a stock market downturn, and inflation falling below 2%. He believes that the stock market is overvalued and will likely see a decline as the anticipated recession impacts the economy. While his predictions differ from the general sentiment among top investors, it is crucial for investors to weigh various perspectives and conduct thorough research before making any investment decisions.
