5 Questions Bob Doll Is Asking About Today's Markets

3. Is a recession inevitable?

The global economic expansion will experience more ebbs and flows but “the end point is inevitable, namely a recession,” Doll wrote. He predicts headline inflation will likely bottom out soon, with core inflation moderately decelerating further and leveling off in the 2024 first half — well above pre-pandemic and central bank target levels.

Solid job growth, wage gains and rising consumer expectations have supported “soft landing” expectations for the economy, but the lagged effects of Fed rate hikes will likely keep weakening consumer spending, Doll said, noting credit card and auto loan delinquencies have been rising. He doesn’t see an imminent downturn, however.

Inflation will prove to be sticky until an economic downturn develops that undermines companies’ ability to raise prices, Doll predicted. Inflationary pressures may stay subdued in coming months, but indicators suggest inflation will persist at too high a level, he said.

China’s weak economy, however, is helping to lower U.S. inflation due to cheaper export prices, Doll noted.

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