Top CEO says economy 'ready to crack' in dire warning

Former Chrysler and Home Depot CEO Bob Nardelli has warned that the U.S. economy is about to crack like a whip.

Appearing this Wednesday on Fox Business Network’s “Mornings with Maria,” he warned the economy is “ready to crack” and that the incompetent mistakes of the Biden administration will likely leave a bevy of challenges for the next president to resolve.

Listen:

(Video Credit: Fox Business)

“What I’ve seen over the past three-and-a-half years is that a series of debacles and missteps have created a tremendous pressure on the fault lines of our economy, and they’re about ready to crack,” he said.

“Whoever gets the next stint in the White House is going to be hit with a wrecking ball in trying to correct the missteps and the overspending of this current administration. So we’re in for a rough time, I would say,” he added.

Indeed, thanks to President Joe Biden’s obsessive “green” agenda and “war on fossil fuels,” oil production has suffered, which in turn has spiked energy costs. Meanwhile, Americans are also dealing with bloated inflation at grocery stores and elsewhere.

“The inflation pipeline has a long tail, and I’ve seen it across many areas, both on raw materials, of course, we see it on labor, and, I did just a quick inquiry over the weekend on apartment rents in downtown Atlanta,” Nardelli said.

“For example, a two-bedroom apartment now goes for like $3,500 a month, and that’s up a couple of thousand dollars from the post-pandemic period, so it’s really depressing to see the impact on family net worth and income level, even though we’ve seen 40% wage increases in some cases, it’s being totally, totally absorbed with inflation and the cost of living,” he continued.

Nardelli has a history of accuracy. Last year he warned that “we’re going to see a lot of bankruptcies” in the retail world, and surprise, surprise, over 5,500 stores shuttered in 2023. It’s been even worse this year, with 2,600 stores closing within the first four months of the year alone.

Meanwhile, a recent report from the Wall Street Journal revealed that the American people’s household net worth has stagnated during Biden’s time in office.

Specifically, household income has only increased 19 percent under Biden compared to the 23 percent spike it experienced under former President Donald Trump.

But here’s the catch: Once inflation is tagged onto the numbers, the increase in income during the Biden administration drops to just 0.7 percent, whereas the increase during the Trump administration remains around 16 percent.

All this comes about a week after top JPMorgan market analyst Marko Kolanovic warned in a note that the S&P will likely fall by roughly 20 percent before the end of the year.

In the note, Kolanovic urged investors not to view the market as bullish despite the Dow Jones seemingly performing so well. Why not? Because one, interest rates are likely to remain high for the time being, and two, because lower-level consumers have also been displaying signs of weakness.

“With very high equity valuations, we do not see equities as attractive investments at the moment and we don’t see a reason to change our stance,” he wrote.

That being said, Kolanovic is the last remaining major bear in the market, as other forecasters have all turned bullish, including Morgan Stanley’s Mike Wilson.

“In the case of Morgan Stanley CIO Mike Wilson, it was ongoing strength in corporate earnings and the likelihood that earnings growth will accelerate in 2025 due to operating leverage that sparked his view change from bearish to bullish,” Business Insider notes.

Kolanovic meanwhile has argued that third- and fourth-quarter EPS (earnings per share) growth will need to move up by 16 percent compared to the first quarter of 2024 to meet expectations.

“That is unlikely, especially if the recent spell of softer activity data-flow continues,” he wrote.

He also reportedly warned that incoming new artificial intelligence technology isn’t apt to save the market.

“We don’t think that narrow themes like AI chips can compensate for all of those traditional market challenges that historically worked against the cycle,” he wrote.

S&P 500 could fall by roughly 20% before year’s end, warns JPMorgan market analyst https://t.co/uR7Fi8Nzk8 via @BIZPACReview

— BPR (@BIZPACReview) May 23, 2024

Kolanovic wasn’t always bearish.

“The closely-followed Wall Street strategist was bullish on stocks for much of the 2022 bear decline, only to flip bearish right around the bottom made in mid-October 2022,” Insider notes. “From there, Kolanovic has remained consistently bearish on stocks throughout 2023 and 2024, when a rally of more than 40% materialized for the S&P 500.”

That said, this is the second time in months that he’s warned about the S&P’s potentially fatal upcoming drop.

Last October, he issued the same warning, claiming that a 20 percent sell-off to the S&P was incoming.

Author
Recent Posts

Vivek Saxena

Senior Staff Writer -- [email protected]
Writers and editors can be contacted at [email protected] with feedback, tips, or corrections.

V. Saxena is a staff writer with a decade of experience as a professional writer, and a lifetime of experience as an avid news junkie. He holds a degree in computer technology from Purdue University. Saxena also contributes to BizPac Review.

Comment

Latest Articles