Stock Market Crash: S&P 500 to Drop 45% Amid Credit Crunch, Recession

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A 31-year market vet who called the current bear market warns an impending credit crunch and recession will sink stocks by 45% as valuations remain higher than dot-com bubble levels

Then there's the growing weakness in the labor market that's starting to show. For example, the number of initial unemployment claims is starting to jump at a recessionary pace, Wolfenbarger said. The four-week moving average of initial unemployment claims has risen 29% over the last eight months.Continuing unemployment claims are also up 24% year-over-year.

According to the Fed's Senior Loan Officer Opinion Survey, 46% of banks now report that they're tightening lending standards. Both consumers and small business are reporting that it's been harder to access credit in recent weeks, which threatens to stall consumer spending — about two-thirds of the economy — and business expansion. On the flip side, demand for loans has fallen off a cliff since last year, as soaring interest rates have made borrowing less affordable.

 

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