Financial analyst Gary Shilling had some tough words for people across the nation this week, with a dire warning about America’s tardy economy.
Expert’s Warning
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/03/shutterstock_1922750729-1.jpg)
Despite the Biden administration repeatedly touting the strength of the economy, one expert strongly disagrees – Gary Shilling.
Gary Shilling Predicts Recession Ahead
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/05/shutterstock_2220587451.jpg)
In an interview with Newsweek, Shilling claimed that the U.S. is on track for a recession – one that we just narrowly avoided last year.
Shilling’s Forecast
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/03/shutterstock_2137244933-1.jpg)
Shilling believes that a recession could happen “in the next six months or so.”
Accurate Predictions in the Past
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/02/shutterstock_19814632.jpg)
Shilling is most famous for predicting the 2007-2008 Wall Street crash, which led to the Great Recession. Shilling was quoted in 2007 stating that “housing would sink the economy,” and he later predicted a “serious recession” in 2008 – both of which came true.
Historical Insights
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/02/shutterstock_653199670-1.jpg)
This has given any of Shilling’s financial forecasts a level of legitimacy, with experts regarding his insights as invaluable. They typically turn to his analyses for guidance during periods of economic uncertainty.
Labor Market Signals
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/01/shutterstock_1722988393-1.jpg)
To make his point, Shilling pointed to the recent string of layoffs across the U.S. These, he states, are an indication that the economy is sliding backward and that the labor market is weakening substantially.
Delayed Impact
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/01/shutterstock_1830394136-1.jpg)
In his interview, he explained, “You had a lot of people that were hired before the pandemic, and then, during the pandemic, there was no desire to lay them off. And so, you haven’t had the weakness in labor markets reflected yet.”
Economic Atrophy
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/05/shutterstock_404210794.jpg)
These weaknesses are coming into play now, according to Shilling, who stated, “But if you look at wage increases and other indicators, labor markets are atrophying. I think it’s really just a slow but delayed response.”
Soft Landing Hopes
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/05/shutterstock_2009042747.jpg)
While the outlook sounds bleak, Shilling is still relatively optimistic. “Forecast is not a science, but I think conditions are such that, if we avoid a recession, we might end up with a soft landing – maybe.”
What It Means for the Economy
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/05/shutterstock_71283253.jpg)
A soft landing is basically a gradual slowdown in economic growth without a sharp downturn or heavy recession. This helps people and businesses weather the shock, and it would be the best possible outcome if America were to slide into a recession.
A Telltale Sign of Economic Slowdown
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/05/shutterstock_2366626339.jpg)
Layoffs have been popping up across the nation in the past few months. Over 190,000 workers at tech companies were laid off in 2023 as the sector saw a continual slowdown.
Various Industries Facing Job Losses
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/01/shutterstock_1817935016-1.jpg)
Just this year, we’ve seen thousands of layoffs in factories throughout Illinois, unemployment statistics creeping up in Connecticut, Washington, and Rhode Island, and announcements by big companies that even more jobs will be gone before the year is through.
Company Layoffs
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/02/shutterstock_2413955539-1.jpg)
Tesla is planning to cut 6000 jobs in Texas and California due to a series of mounting issues within the company. Rival electric vehicle company Rivian is already in its second round of layoffs this year – around 11% of the total workforce has been cut so far. Last year, Rivian laid off around 1000 people.
Tesla, Rivian, General Motors
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/05/shutterstock_1110974912.jpg)
General Motors announced over 1000 layoffs just before Christmas due to delays in production and issues with contracts. Student Transportation of America, one of the biggest school bus companies, is letting go of 225 people in Florida out of their 5,000 employees.
A Bad Omen
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/02/shutterstock_1141119107.jpg)
For Shilling, all these layoffs are an omen of what’s coming, and they’re bringing with them a weak U.S. economy.
Ripple Effects
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/03/shutterstock_758264113-1.jpg)
“Obviously if you get enough layoffs, it takes the whole economy down. But so far, it’s been confined to very specific areas, particularly areas where there was huge hiring before the pandemic. A lot of the tech areas have backed off after over-hiring, and now they’re having layoffs,” Shilling explained.
Tech Sector Bubble
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/02/shutterstock_2021639234.jpg)
He went on to explain that companies have been keeping staff despite the need for cuts because they went through the hassle of hiring during the pandemic. Now, that dam is beginning to burst, but it’s still not being represented in official figures.
Federal Reserve’s Response
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/01/shutterstock_1449056165-1.jpg)
“And as long as that’s the case, the Federal Reserve is in no rush to cut [interest] rates. I mean, why should they? There’s no evidence that the economy is showing the kind of weakness that would indicate the rate cuts are needed.”
Economic Calamity
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/01/shutterstock_1357119908-1.jpg)
According to Shilling, this is all feeding into a larger calamity, as “the longer that situation lasts, the longer it’s going to be before you have any rate cuts, and the more likely it is the economy is going to slip.”
Cautionary Words
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/02/shutterstock_339364181.jpg)
Whether his predictions will come true remains to be seen, but it’s crucial to remember that although his warnings may sound dire, he’s still holding out hope for a soft landing. Let’s keep an eye on how things unfold in the coming months.
21 States Where Squatters Can Legally Claim Your Property
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/03/shutterstock_248799484-1.jpg)
Discover how squatters’ rights, or adverse possession, are more than just legal jargon—they’re stories of unexpected twists in the world of real estate. From sunny California to the historical landscapes of Pennsylvania, here’s how these laws could turn the tables on homeowners and squatters alike. 21 States Where Squatters Can Legally Claim Your Property
14 Things That Are Banned in the U.S. but Totally Fine Elsewhere
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/04/pexels-ekaterina-belinskaya-4922689-1.jpg)
Ever feel like America’s rulebook was written by someone with a dartboard? Across the pond or down under, things get even wackier. Let’s take a walk on the wild side of global “Do’s” that are definite “Don’ts” in the Land of the Free. 14 Things That Are Banned in the U.S. but Totally Fine Elsewhere
25 American States Nobody Wants to Visit Anymore
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/02/shutterstock_1865362234-1.jpg)
Across the United States, some states capture the hearts and itineraries of many, while others remain quietly on the sidelines, overshadowed or misunderstood. These 25 states, facing what you might call a popularity crisis, are brimming with hidden wonders, cultural riches, and natural beauty, awaiting those willing to look beyond the usual tourist trails. 25 American States Nobody Wants to Visit Anymore
20 Foods That Are Cheaper to Eat Out Than Making at Home
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/04/shutterstock_1390308734-1.jpg)
In a world where convenience often wins, certain culinary delights come with a lower price tag when enjoyed at a restaurant rather than crafted in your own kitchen. Here are twenty foods that might save you both time and money when indulged in at your favorite eatery. 20 Foods That Are Cheaper to Eat out Than Making at Home
17 Things You’re Paying For, but You Don’t Have To
![](https://www.fromfrugaltofree.com/wp-content/uploads/2024/05/shutterstock_1084769588-1.jpg)
In the land of the free, there’s a price tag on everything, but savvy Americans know better than to open their wallets for just anything. Here are 17 expenses you’ve been shelling out for without realizing there’s a cheaper or even free alternative. 17 Things You’re Paying For, but You Don’t Have To
The post Recession Alert: Wall St. Crash Predictor Raises Concerns first appeared on From Frugal to Free.
Featured Image Credit: Shutterstock / Ground Picture.
The content of this article is for informational purposes only and does not constitute or replace professional financial advice.