Analyst: US economy faces downside risks by 2025, potentially triggering at least a 10% stock market correction.

TechFlow News: According to a report from Caijing, on December 31, The Leuthold Group’s Chief Investment Strategist Jim Paulsen released a new research report pointing out that despite widespread market concerns about economic overheating, the U.S. economy is more likely to experience an unexpected slowdown in 2025, which may trigger a stock market correction of at least 10%. The report shows that the current bond yield is maintained at around 4.6%, and the expected economic surprise index will drop to -35 in the first quarter, with GDP growth expected to slow from the current 2.7% to below 2%.

Paulsen analyzed multiple warning signals, including the continuous deterioration of the financial condition index, the relative decrease in the number of stocks rising in the stock market, and the periodic weak performance of stocks. He pointed out that in the past 18 months, two small declines in the financial condition index have triggered significant market adjustments, including the stock market correction in October 2023 and the collective plunge of the seven tech giants.

However, Paulsen believes that the bull market is expected to continue in 2025, but advises investors to increase defensive allocations and closely monitor the trend of technology stocks. He emphasizes that the possibility and extent of a correction in US stocks largely depends on the performance of popular technology stocks, and any slowdown in these stocks could bring systemic risks.