Gary Shilling, an economist known for his pessimistic forecasts and for anticipating the 1969-1970 recession, warns that the United States economy could face a new contraction in 2026.
In an interview given to Business Insider, Shilling stated that a recession is “almost inevitable” by the end of the year, pointing out several risk factors, among which a “frozen” real estate market, the decrease in corporate investments, and weakening consumption.
“The stocks are very expensive and it is likely that we will witness a major correction in the near future,” he said, estimating that a 20% to 30% decrease would not be unusual from a historical perspective.
At the same time, the economist emphasized that risks are not always obvious: “I built my career identifying hidden vulnerabilities and, even if there is no clear signal at this moment, it doesn’t mean they don’t exist.”
Signs of weakness in the economy
According to Shilling, the American real estate market remains stagnant, as both buyers and sellers hesitate to transact due to high interest rates. At the same time, the limited supply of affordable housing and the increase in foreclosures indicate mounting pressures on homeowners.
Another invoked indicator is the reduction of companies’ capital investments. The cited data shows that these expenses have only increased by 3.9% by the end of 2025, compared to a peak of 24% during the pandemic period.
In addition, consumption — regarded as a vital pillar of the American economy — is showing signs of weakness. The Federal Reserve’s preferred inflation indicator has risen by 0.7% in a month and by 3.5% compared to the previous year, suggesting a persistent pressure on purchasing power.
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