Peter Berezin, Chief Global Strategist at BCA Research, is maintaining a bearish economic outlook, despite President Trump’s 90-day pause on tariffs. While many Wall Street experts are becoming more optimistic, Berezin still believes a U.S. recession is likely in 2025.
S&P 500 Could Fall to 4,500 in Base Case Scenario
Berezin now predicts a 60% chance of a recession, down from his earlier estimate of 75%. He warns that if the economy slows as expected, the S&P 500 could drop to around 4,500, which would be a 25% decline from recent highs.
“It’s not a guarantee, but it’s still my base case,” Berezin told Business Insider.
Currently, the S&P 500 trades at 23x earnings, with estimated EPS (Earnings Per Share) of $260. Berezin suggests the index could fall to 18x earnings with EPS slipping to $250.
Key Concerns: Weak Labor Market and Rising Delinquencies
Berezin highlights several troubling economic indicators:
- Job openings have declined sharply since 2022.
- Credit card delinquencies reached 3.05% in Q1 2025, the highest since 2011.
- Auto loan defaults and student loan repayments are also putting pressure on consumers.
- Housing starts fell 9.8% in May, signaling a slowdown in construction and affordability challenges.
“The labor market looks strong on the surface, but insulation is fading,” he noted.
Tariffs Still a Risk to U.S. Economy
Despite the short-term tariff pause, Berezin warns that the current effective tariff rate of 15% remains harmful. He believes a rate below 10% would be less damaging, but doubts Trump will reduce tariffs unless forced by the market.
In fact, Berezin fears higher tariffs could return — especially on industries like:
- Pharmaceuticals
- Semiconductors
- Lumber
Trump’s Trade Policy May Trigger More Market Volatility
Berezin argues that Trump’s tariff strategy, if not revised, could worsen inflation and slow consumer spending. While some strategists hope for Trump’s proposed tax cut bill to offset these impacts, unfunded tax cuts could drive bond yields higher, canceling out the benefits.
According to CBO estimates:
- GDP may grow by 0.5% annually over the next decade due to tax cuts.
- But the U.S. deficit could rise by $2.8 trillion, and
- 10-year Treasury yields may spike by 14 basis points.
Will the Market Force Trump’s Hand?
Berezin believes that only a stock market crash or spiking interest rates might prompt Trump to make real changes. He points out that:
- A dip in the S&P 500 below 5,000, and
- A 10-year Treasury yield above 4.5%
…likely influenced the current 90-day tariff pause.
“We might see more tariff relief — but only if the market pressures Trump to act,” Berezin said.
