CNBC: Economy Isn't Strong Enough to Support Record Market Highs, Mark Zandi Warns in New Report

January 03, 2020

Article by Stephanie Landsman in CNBC financial

A new report suggests the record stock market highs are on borrowed time.

According to Moody’s Analytics chief economist Mark Zandi’s 2020 outlook, the backdrop is showing signs of cracks.

Zandi gave CNBC an exclusive first look at his economic forecast ahead of its official release.

“All of the pillars of the stock market look a bit shaky to me,” he told “Trading Nation” Thursday. “While the economy will be okay in 2020, I think the stock market will have a rougher go of it.”

While he cites consumer spending, household balance sheets, jobs growth and a housing market as economic bright spots, he also sees slower than expected real GDP growth, a growing federal budget deficit and challenged corporate earnings pressuring the economy.

“Businesses are going to struggle with declining margin, and so corporate earnings growth will be flat. Lackluster,” he said.

Zandi’s base case is the stock market ends the year flat or below current levels as real GDP grows by 2%.

“That’s the average rate of growth we’ve been getting throughout the expansion,” Zandi said. “I don’t think we get much more than that. I don’t see anything driving growth higher than that.”

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