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US Economy Faces 'Fork In The Road': Is Yardeni's 'Roaring 2020s' Still Possible?

The U.S. economy stands at a critical juncture. Mounting recession fears are colliding with the possibility of a technology-fueled productivity boom that could reshape the decade and power the stock market to new heights.

In a note shared Monday, Ed Yardeni, one of Wall Street's most enduring bulls, said the U.S. economy faces "a fork in the road." The Yardeni Research president gives a 65% probability of a so-called Roaring 2020s scenario and a 35% chance of a more stagnant, stagflationary outcome, including a recession.

"We've decided to fold our 1990s meltup/meltdown scenario into our Roaring 2020s scenario," Yardeni said.

"The current correction in the stock market suggests that the former has played out already, as the bull market's highflyers have been hit hardest."

What's Behind The Current Market Correction?

Markets have clearly been rattled. The S&P 500 index, as tracked by the SPDR S&P 500 ETF Trust (NYSE:SPY), has declined 10.1% from its Feb. 19 peak through Mar. 13, while the Nasdaq 100, tracked by the Invesco QQQ Trust, Series 1 (NASDAQ:QQQ), has slid 11.8% since its Dec. 16 high.

“The Magnificent-7 stocks led the recent rout,” Yardeni said.

The Roundhill Magnificent Seven ETF (NYSE:MAGS)—tracking the elite group of tech ...