World’s Most Accurate Economist Believes US Recovery Unlikely Before 2022
Christophe Barraud stated that the US economy will take longer to recover than most people expect, according to Markets Insider.
Christophe Barraud is the chief economist at Market Securities. He believes the long recovery the US is facing could hinder stock market returns for years. The pandemic has driven unemployment numbers to record highs and sapped 5 percent from GDP in the first quarter of 2020. Economists predict that GDP will decrease more than 20 percent in quarter 2.
"It will take a long time for life to return to normal," Barraud said. Furthermore, even if a successful vaccine is ready by the end of the year, distributing and producing these drugs would stretch into 2021.
Barraud believes that, with these issues considered, the US won’t be able to return to its 2019 GDP until at least 2022. For some European economies, Barraud predicts even longer recoveries.
Barraud has a serious resume to back up his claims. He has been ranked as Bloomberg’s most accurate US economist eight years in a row. Furthermore, he has been ranked as the top economist for Europe since 2015, and China since 2017.
Barraud also believes that the slow economic recovery could drag stocks along with it, possibly triggering another correction. "Markets are not pricing in a lot of risk," said Barraud.
Furthermore, there are other events that could affect financial markets. The upcoming presidential election, changes in fiscal policy, trade policy, and others could drag returns.
"At this point people look a little optimistic about EPS for next year," said Barraud. Analysts and investors have driven up markets on hopes for a V-shaped recovery but have neglected the prospect of tax hikes after the presidential election. "The market could react because at this point there is no room for disappointment," he said.
"My advice would be to be cautious from August, maybe take some protection," Barraud said.