S&P 500 may plunge 30 per cent as U.S. stocks likely to witness major correction, economy could slip into recession, warns legendary economist

Stocks are likely to witness major correction by the end of 2026 even as the U.S. economy could slip into a recession, top economist Gary Shilling has predicted. Shilling comments came amidst the growing concerns among Americans over President Donald Trump's handling of the economic affairs. Wall Street investors have also been voicing apprehensions over likely stocks' plunge due to detrimental impact of artificial intelligence (AI) dependence.



U.S Stocks Plunge



Shilling said that stocks may get corrected because of inflated valuations. S&P 500 may plunge 30 per cent.

S&P 500 is down 71.47 points, or 1 per cent for the week, Dow Jones is down 328.58 points, or 0.7 per cent, Nasdaq is down 357.47 points, or 1.5 per cent, and Russell 2000 is down 26.12 points, or 1 per cent for the week.



U.S Economy to Go into Recession Mode?


Shilling has warned that there could be a slowdown in the U.S. economy. This, the economist predicted, could lead to decline in consumer spending which may cause recession.

In the past week, many Americans remained laser focused on the economy, inflation and how those forces could impact their lives. But it is almost impossible not to notice that trips to the grocery store or gas station are more painful than they were last year.

A key inflation measure jumped in March as gas prices soared, the latest sign that the Iran war is pushing up the cost of living and delaying any interest rate cuts by the Federal Reserve.

An inflation gauge monitored by the Fed rose 0.7 per cent in March from February, up sharply from the previous month, the Commerce Department said Thursday. Compared with a year ago, prices rose 3.5 per cent, the biggest increase in almost three years.

Excluding the volatile food and energy categories, core inflation rose 0.3 per cent in March from February, and it was 3.2 per cent higher than a year earlier. The annual figure is above February’s reading of 3 per cent.

Gasoline prices rocketed higher, setting new multi-year highs for four consecutive days starting Tuesday. The average price for gallon of regular gasoline had the largest overnight gain since the war began on Friday, hitting $4.39, prices continued to climb Saturday.