I really don’t want to be alarmist, but things in the stock market could get much worse. 40% further decline? 60% more?

My stock market forecasts rely on gobs of tremendously boring data on a wide range of economic fundamentals. Usually economic fundamentals don’t shift instantly, nor do comprehensive data compilations such as for Gross Domestic Product or inflation. Most of the data I use is issued monthly or even quarterly. It is always somewhat out of date, and I just make adjustments.

Trump’s tariff announcements DID spin the economic world on a dime. My current data instantly became bogus. Suddenly ,the world economy is facing a dramatically different trade picture that threatens many countries with recession, or worse. Prior to the tariff announcements the US was already slowly sliding into recession. Now a US recession is highly likely according to more and more forecasters.

So, I shifted my forecasting process around to be able to ask it “What if?” questions, as in “What if the US was highly likely to be in recession next quarter, and certain to be in recession by September?” “What if oil prices continued to plummet down to $50 per barrel?”

Based on my entire existing database, what usually happens if the world economic order goes really out of whack is horrific. The S&P 500 6 month forecast would be an additional 40% loss and the worst probably 6 month loss could be 75% to 85%.

These are not hard and firm forecasts. No way. I only looked at a few possible alternatives. But, based on decades of stock market experience this is most probably how the market would perform. What we are facing now is a mild form of what did hit the stock market when Covid first spread.

The only thing that is certain is that more bad economic news should be expected and any positive news would be a major surprise.