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Gary Shilling, the legendary forecaster known for his bearish accuracy and being fired from Merrill Lynch for predicting the 1969-70 recession, is sounding the alarm on a 2026 economic collapse.
In a recent interview with Business Insider, Shilling warned that a U.S. recession is “almost inevitable” by year-end, driven by a “frozen” housing market, corporate investment indicators and a weakening consumer base.
“Stocks are very expensive and there probably is a major correction coming somewhere in the relatively near future,” Shilling said. “A decline of 20% or 30% is no big deal by historical standards. So I would say that’s probably in the cards.”
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“I’ve sort of made a career looking for those hidden flaws, and I don’t see anything right now that is just screaming for a big sell-off, but that doesn’t mean it isn’t there,” he added.
Across American real estate, buyers and sellers have been reluctant to make moves as interest rates remain elevated, and mortgage loan rates slowly tick down. There is also a lack of affordable inventory and reports of rising foreclosures, signaling homeowners continue to get squeezed.
Shilling also pointed to what he described as a “collapse” in capital expenditures, or large investments that companies expect will last for years and boost overall future value. Business Insider cited that broader capital expenditures grew just 3.9% by the end of 2025, compared with a pandemic peak of 24% capex growth.
The economist spotlighted the state of the U.S. consumer as the third pillar leading to a recession, with the Federal Reserve’s preferred inflation gauge remaining stubbornly high in March, rising 0.7% month-over-month and up 3.5% from a year ago.
When it comes to economic solutions, Shilling said a downturn could be prevented by fiscal stimulus or a strengthening consumer — “both of which he thinks are unlikely.”
“That’s really on very thin ice in terms of income, in terms of people’s willingness to spend,” Shilling said.
Other economists appear divided on the economic outlook for 2026. BNY Wealth Head of Investment Strategy and Equities Alicia Levine said no recession is coming on “Making Money with Charles Payne” last month; around the same time, billionaire investor Leon Cooperman told FOX Business’ Liz Claman that the U.S. is heading toward a recession.
“My own view is, there’s a lot of problems out there. The market’s too highly valued,” Cooperman said.
“It just feels that the market was already weakening going into the Iran conflict,” Levine countered. “Earnings have moved higher since the beginning of the year, 3% higher… that’s what we’re looking at, and we don’t see a recession this year.”
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