Bob Doll’s Annual Predictions Include A ‘Mild Recession’ For 2024

The U.S. may have escaped a recession in 2023, but the same may not be possible for this year, according to Bob Doll, chief investment officer at Crossmark Global Investments.

Instead, investors will be faced with a shallow and short-lived slowdown, Doll, a financial industry thought leader said in releasing his annual list of 10 predictions for the new year.

Doll said he is “skeptical” about the economy’s ability to achieve a happy medium this year.

“Either we get a noticeable slowdown or recession and earnings fall short (of expectations), or double-digit earnings growth materializes, probably requiring stronger economic growth, less progress if any on inflation and a Fed that is boxed in,” Doll said in a statement.

“The long-predicted recession will likely materialize in 2024 [because of] the lagged effects of monetary tightening both via the Fed and long-term interest rates,” he added. “While the absence of a recession thus far has increased market expectations for a soft landing, historical comparisons point out that a recession prior to this point would have been on the early side compared to history.”

Last year, Doll predicted a “bumpy ride” for the economy and investing and said he expected a mild recession in 2023. Doll, whose predictions are an anticipated event for the financial world each year, said the economy will experience challenges in 2024.

The investment strategists full list of predictions are the following:

1. 
   The U.S. economy experiences a mild recession as the unemployment rate rises above 4.5%.
2. 
   The 2-3% inflation ceiling of the 2010s becomes the 2-3% inflation floor of the 2020s.
3. 
   The Fed cuts rates fewer than the six times suggested by the Fed funds futures curve.
4. 
   Credit spreads widen as interest rates decline.
5. 
   Earnings growth falls short of the double-digit percentage consensus expectation.
6. 
   Stocks record a new all-time high early in the year, but then experience a fade.
7. 
   Energy, financials and consumer staples outperform utilities, healthcare and real estate.
8. 
   The faith-based share of industry AUM rises for the eighth year in a row. (Crossmark is a faith-based investment firm based in Houston.)
9. 
   Geopolitical crosscurrents multiply but have little impact on markets.
10. 
    The White House, Senate and House all switch parties in November

For the present, “equities are richly valued, with volatility near historic lows, even as geopolitical and domestic political risks remain elevated,” Doll said. “We expect the 2023 momentum and Fed cut euphoria to fade early in the New Year, resulting in lackluster earnings growth and downside risk to equities as 2024 unfolds.”

Although Doll said the global and domestic political environment will not have a huge impact on markets, he explained that eventually the political dysfunction in Washington will take its toll.

Others are predicting a brighter future for this year, a prediction that Doll said he finds “unlikely.” Doll will hold a webinar next Wednesday to further explain his predictions.