Ed Yardeni now sees a 40% chance of recession

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is a News Reporter at Invezz covering the European, Asian and North America stock markets. Wajeeh has 5… read more.
on May 25, 2022
  • Ed Yardeni lowered his year-end target for the S&P 500 index.
  • He explained why a recession is still not his base-case scenario.
  • The benchmark index closed about 1.0% up on Wednesday.

Ed Yardeni lowered his year-end target for the S&P 500 index by roughly 10% on Wednesday. He now sees the benchmark closing 2022 between 3,825 and 4,335.

Yardeni’s remarks on CNBC’s ‘Halftime Report’

The recent economic data also pushed the President of Yardeni Research into raising his view on the probability of a recession to 40%. In an interview with CNBC’s Scott Wapner, he said:

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Housing numbers were extremely weak yesterday. The business surveys for New York, Richmond, and Philadelphia are looking very weak for May, which means we’ll probably get a very weak Purchasing Managers’ Index (PMI).

According to the U.S. Census Bureau, record prices and higher mortgage rates pushed new home sales down to a two-year low in April – the fourth consecutive monthly decline.

Recession is not Yardeni’s base-case scenario

At 40%, a recession is still not his “most likely” scenario. Yardeni sees several reasons to believe the U.S. economy will “hang in there”. This afternoon on CNBC’s “Halftime Report”, he noted:

The labour market continues to be very strong. And consumers have accumulated about $2.0 trillion in excess savings over the past two years. We’re now starting to see data come down. That suggests they’re dipping into this excess liquidity.

Also on Wednesday, the U.S. durable goods orders were reported up 0.4% in April, which, as per the investment strategist, was actually “pretty good”. U.S. equities closed about 1.0% up today.

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