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Harry Dent is not one to shy away from predictions. Just take a quick look at some of the man’s bibliography: he wrote The Great Boom Ahead in 1993 and followed it up with The Great Jobs Ahead in 1995. In 2009, he authored The Great Depression Ahead, and in 2011, The Great Crash Ahead.Now, Dent, the economic forecaster perhaps best known for the use of demographics in his analysis, is predicting a big market crash this summer.
Dent told CNBC this afternoon:
We think markets are going to go up for a while. I think Maria [Bartiromo] is right – the market wants to go up.
We’ll see one more correction into this second fiscal cliff. I think we’ll see another rally into March, April, May, or something. By the summer, we get another crash.
I think it’s going to be a choppy rally – up, down, up, down, with an upward bias. It’s the second half that we think a crash starts – that, just like the last crash, lasts about a year and a half or so, goes into late 2014, early 2015.
We get a slight new high in the Dow this year, and then we get a slight new low in the next crash. That’s been the pattern. Higher highs in each bubble, slightly lower lows in each crash.
Again, this should not be something that people go, “Oh my gosh, how could this happen?” It’s been happening since 1995. Bubble, crash, bubble, crash, bubble, crash.
Here is what Dent told CNBC regarding why he expects this crash in the second half of 2013:
How many crashes have we seen in the last 10 years or so? 2000, 2002 – bubble, crash. 2007 – bubble, crash. We’re getting a bubble and crash every four or five years.
This is what we have when you go over a demographic cliff. Remember Japan – Japan went over the demographic cliff. Peak in baby boom spending, peak real estate boom.
They had a bust. Guess what? 22 years later, real estate is still down over 60 per cent, still drifting down. Stocks are down nearly 80 per cent, not that far off their lows. They keep bubbling up and then going down to new lows.
This is the new normal, given that baby boomers are ageing and the next generation is not only not in the workforce yet, largely, but they’re not as large when they do [enter]. So, we’re never going to see real estate prices at these levels again, and we’re not going to see stocks at the level we saw in 2007 for a long time.
So, to me, this is not unusual at all.
Dent told CNBC regarding the United States, “We call this the economy in a coma.”