A recession in 2024 would burst the biggest stock bubble since the dot-com craze, sending the market down 40%, veteran strategist says

• A recession will hit in 2024, according to Paul Dietrich, chief investment strategist of B. Riley.

• Even a mild recession could spark as much as a 40% stock crash, Dietrich told Business Insider.

• That’s because the market is looking the most overvalued since the dot-com craze of 2001, he said.

A recession will likely strike in 2024, and even a mild economic slowdown could send stocks plunging, as investors are playing in one of the most overvalued markets in over twenty years.

That’s according to Paul Dietrich, the chief investment strategist of B. Riley Wealth. US stocks have hit fresh records again this week following a wildly upbeat earnings report from chip maker Nvidia. But the higher stocks go, the higher they have to fall in a potential recession.

Dietrich is forecasting a mild recession to strike, but even a low-grade slowdown could spark as much as a 40% stock crash, which would take the S&P 500 to around 3,000.

“We’re still on the path to recession,” Dietrich told Business Insider in an interview, adding that even a strong GDP print for the quarter wouldn’t dent his confidence in a coming downturn. “We’re so overvalued now in the market.”

The optimism is high across Wall Street as investors price in hefty interest rate cuts this year and AI mania shows no sign of ebbing. Investors are expecting around 100 basis-points of rate cuts from the Fed, according to the CME FedWatch tool. Meanwhile, the economy has shown surprising resilience over the past year, with growth estimated to fall around 2.9% for the current quarter, per Atlanta Fed economists.

But a closer look at the numbers paints a less rosy picture of the economy. A slew of economic indicators have fallen into “deep recession territory,” Dietrich warned, pointing to signs of weakness flashing in the job market and consumer spending. 

The unemployment rate remains near an all-time low, but workers without a job are having trouble regaining employment. Continuing unemployment…