The stock market may be taking a breather from its big fall — the S&P 500 was up about 1.5 percent on Jan. 22 — but one economist thinks that we're going to see plenty more volatility in the next few months and another big correction in about two years.
Alan Beaulieu, economist and co-principal of ITR Economics, a New Hampshire-based economics consultancy firm, thinks that macroeconomic fears will make investors jittery for some time, at least until China's government intervenes with a stimulus program.
Looking further into the future, we'll see another decline, of at least 10 percent, in late 2018, when U.S. interest rates reach 3.5 percent, he said. That will make it more difficult for the consumer to continue propping up the economy with spending.
Beaulieu, who runs the firm with his twin brother Brian, also an economist, has a history of getting calls right. He predicted the current drop back in 2009. He also called the recession, and according to him, their predictions have come true 95 percent of the time over the last 60 years.
The Beaulieus use a proprietary mathematical equation called cycle theory, but a big part of their work focuses on the rate of change in leading indicators — or how fast indicators change from one month or one year to the next.
Most of its predictions are short term — a year out — but it does make much longer calls, too. Its firm has given advice to major companies, such as Honda, Caterpillar, J.P. Morgan, Wells Fargo and more.
While he doesn't think we'll experience a more than 20 percent market drop like we did in 2008 — America is in a much better position than it was back then, he said — we will likely see some more large swings and increased volatility until at least the middle of the year. Why only until the middle of the year? Because market ups and downs are usually related to people's fears, and those worries won't dissipate for a few months.
Investors are nervous about where the global economy is headed, and the cycle of mass sell-offs discount buying and then selling again will continue until people start feeling more comfortable, he said. It will take two things for people to feel calmer. They need to see America's economy growing — and it is, Beaulieu said — and an intervention in China.
"The U.S. is leading the way, economically speaking," he said. "The American consumer is doing yeoman's work. It's marvelous. We have low debt, low delinquencies, good savings in terms of dollars, and spending is at high levels. There's job creation, and the economy is strong."
Read more: Buckle up! This economic doomsayer sees plenty more volatility
Alan Beaulieu, economist and co-principal of ITR Economics, a New Hampshire-based economics consultancy firm, thinks that macroeconomic fears will make investors jittery for some time, at least until China's government intervenes with a stimulus program.
Looking further into the future, we'll see another decline, of at least 10 percent, in late 2018, when U.S. interest rates reach 3.5 percent, he said. That will make it more difficult for the consumer to continue propping up the economy with spending.
Beaulieu, who runs the firm with his twin brother Brian, also an economist, has a history of getting calls right. He predicted the current drop back in 2009. He also called the recession, and according to him, their predictions have come true 95 percent of the time over the last 60 years.
The Beaulieus use a proprietary mathematical equation called cycle theory, but a big part of their work focuses on the rate of change in leading indicators — or how fast indicators change from one month or one year to the next.
Most of its predictions are short term — a year out — but it does make much longer calls, too. Its firm has given advice to major companies, such as Honda, Caterpillar, J.P. Morgan, Wells Fargo and more.
While he doesn't think we'll experience a more than 20 percent market drop like we did in 2008 — America is in a much better position than it was back then, he said — we will likely see some more large swings and increased volatility until at least the middle of the year. Why only until the middle of the year? Because market ups and downs are usually related to people's fears, and those worries won't dissipate for a few months.
Investors are nervous about where the global economy is headed, and the cycle of mass sell-offs discount buying and then selling again will continue until people start feeling more comfortable, he said. It will take two things for people to feel calmer. They need to see America's economy growing — and it is, Beaulieu said — and an intervention in China.
"The U.S. is leading the way, economically speaking," he said. "The American consumer is doing yeoman's work. It's marvelous. We have low debt, low delinquencies, good savings in terms of dollars, and spending is at high levels. There's job creation, and the economy is strong."
Read more: Buckle up! This economic doomsayer sees plenty more volatility
