Danish economist Henrik Zeberg has warned that the US economy is at risk of recession, with the Nasdaq 100 index expected to peak by the end of this year and then collapse, potentially plummeting by 72% to near its 2022 low by the third quarter of 2027.
Zeberg, currently serving as the macro strategist at Swiss investment company Swissblock, has been studying economic cycles for years. According to Business Insider, his proprietary economic model suggests that the US economy is heading towards a downturn, with the current facade of economic prosperity largely driven by the growth of tech stocks and the high-income population, rather than broad economic fundamentals. He refers to this phenomenon as “K-shaped economy.”
Zeberg’s model predicts that the Nasdaq 100 index may surge to between 37,000 and 39,000 points later this year before experiencing a rapid decline to around 10,600 points, representing a drop of about 72%, comparable to the Nasdaq 100 index’s 83% decline from its peak during the dot-com bubble burst in 2000.
“I believe we will see a scenario similar to that of 2000,” Zeberg stated, adding that after the stock market crash, other sectors such as banks and private lending in the financial system may also face broader turmoil.
Despite recent strong economic data, such as the addition of 162,000 jobs in the US in August, well above market expectations, and the Atlanta Fed’s latest estimate indicating a potential GDP growth rate of 4.7% in the third quarter, Zeberg points out that these figures mask the actual pressures faced by middle and lower-income families.
According to data released by the Bureau of Labor Statistics (BLS) via the FRED database, the share of long-term unemployed individuals (27 weeks or longer) in August reached 27%. Additionally, reports indicate that the US labor force participation rate hit a 50-year low in July. Zeberg speculates that the majority of job growth numbers from the past year may face significant downward revisions in the future. He mentioned that official figures had indeed revised down employment numbers by 911,000 for the period from April 2024 to March 2025.
In the housing market, data from the National Association of Realtors (NAR) shows a 2% decline in existing home sales in August, while inventory of homes for sale reached a 10-year high. Zeberg highlighted in his Substack article that, “The housing market is the sector most sensitive to interest rates in the economy because it is supported by financing. Once funding becomes more expensive, the housing market will be the first to feel the impact.”
Zeberg noted that an increasing number of middle and lower-income Americans are feeling the pressure due to rising inflation and borrowing costs. A survey by household financial services company Primerica for the second quarter revealed that 7% of middle-class respondents claimed their income could not keep up with living costs, and 58% said they could not afford emergency expenses of at least $1,000.
Data from the Bureau of Economic Analysis (BEA) also shows a significant drop in the personal savings rate to 3% of disposable income in July, compared to 9.5% in 2021. Zeberg pointed out that most of the current economic growth in the US is concentrated in the tech industry and high-income groups; Fitch Ratings estimates that tech industry fixed investment accounted for 5% of GDP in the second quarter.
“This is not real prosperity,” Zeberg stated. “Normally, corporate profits continue to grow even into the early stages of a recession, but once the story on the consumer side cannot continue, companies will also struggle.”
Zeberg outlined four stages that the market may experience in the coming year:
Stage One: Frenzied Peak/Now until the end of 2026
The economy continues to weaken, but every piece of bad news is interpreted as “the Fed will cut rates soon,” leading to a “vertical” surge in the stock market, with cryptocurrencies and gold surging in sync while the US dollar weakens due to rate cut expectations. The Nasdaq 100 index may reach 37,000 to 39,000 points by the end of this stage.
Stage Two: Beginning of a Crash/Fourth Quarter of 2026
The job market deteriorates significantly, forcing the Fed to cut rates, and the US dollar index falls to a critical range of 93 to 94. Subsequently, events such as disappointing earnings reports from tech giants trigger a “violent sell-off” in the US stock market within 3 to 4 weeks.
Stage Three: False Rebound/First to Second Quarter of 2027
The stock market briefly stabilizes, with investors eager to catch the rebound, but the US economy is actually quietly slipping into a recession. The rebound quickly fizzles out, long-term bond yields rapidly decline, and there are signals of pressure in the private lending market, including loan write-downs and fund redemption freezes.
Stage Four: Black Swan Event/Second to Third Quarter of 2027
The high leverage risk and cyclical structure of AI trading finally trigger a “black swan event,” causing US stocks to plummet back to their 2022 lows, while global funds flow into the US dollar for safety, resulting in a rise in the US dollar index.
Zeberg stated that he will closely monitor two signals to determine the market’s peak timing: whether the US dollar index falls to 93 to 94 (indicating that rate cut expectations have been priced in) and whether short-term bond yields begin to decline rapidly (indicating that the market is pricing in economic weakening and rapid Fed rate cuts). He also mentioned that if yields stabilize at current levels or if housing and job market data show significant improvement in the coming months, he will re-examine this forecast.
It is noteworthy that the CME FedWatch tool currently shows that the market is pricing in a nearly 90% probability of the Fed raising rates by 25 basis points next week, which is inconsistent with Zeberg’s expectation of the Fed shifting to rate cuts.
Zeberg’s arguments currently represent a non-mainstream view on Wall Street, as most forecasting institutions still believe that the AI boom can continue for several more years. However, with oil prices surpassing $100 per barrel and an increasing number of investors adopting a cautious stance towards the actual strength of the US economy, concerns about inflation persist.