Michael Burry and Jeremy Grantham have long sounded the economic alarm. A 'Trumpcession' may finally prove them right.

• Michael Burry, Jeremy Grantham, and other commentators have long warned about stocks and the economy.
• President Donald Trump's tariffs and Elon Musk's DOGE job cuts are hitting markets and growth forecasts.
• Bill Gross, Paul Krugman, David Rosenberg, and Jeremy Siegel are all bracing for trouble ahead.

Michael Burry, Jeremy Grantham, and other market commentators have been warning for years that stocks would crash and the economy would crater. As a "Trumpcession" looms, the doomsayers might finally be proven right.

Taking stock

The Atlanta Fed's GDPNow model forecasts the US economy will shrink by an annualized 2.8% this quarter — a dramatic swing from last week when it predicted 2.3% growth. Inflation has also jumped from 2.4% in September to 3% in January, stoking fears of stagflation.

Jeremy Siegel said in his WisdomTree commentary this week: "Virtually all recent real economic data has surprised to the downside, including jobless claims, which unexpectedly spiked above expectations."

The "Wizard of Wharton" and author of "Stocks for the Long Run" said that grim first-quarter growth forecasts partly reflect businesses stockpiling before tariffs take effect, as imports subtract from GDP. Even if the economy grows by 1% or 1.5%, that would be the slowest rate in two years, Siegel noted.

While the overall stock market could head higher, he said a rotation out of riskier, pricier stocks like Nvidia and into defensive stocks was "more likely now than any other time over the past couple of years."

Bill Gross, the billionaire investor dubbed the "Bond King," told Business Insider this week that President Donald Trump's "destructive" tariffs threatened to choke growth and reignite inflation. He also said the Russia-Ukraine war was dividing Western nations, and together those headwinds could hit growth stocks.

David Rosenberg, the former chief North American economist at Merrill Lynch, posted on X this week: "The recession that never came (because of the most fiscal stimulus the United States has ever seen over a five-year period in history outside of WWII) is now coming."

The Rosenberg Research president, labeled the "skunk at the picnic" and "class clown" in 2007 for predicting a recession that arrived soon after, said to any investor adding risk to their portfolio: "You really need to have your head examined."

Paul Krugman, a Nobel-winning economist and former MIT and Princeton professor, blamed the deteriorating US economic outlook on Trump's tariffs against US allies Canada and Mexico, and Tesla CEO Elon Musk's aggressive spending cuts and layoffs in the public sector.

"America is now trapped in a burning Tesla," he wrote on his Substack this week, adding that "large parts of the US economy and government appear to be on the verge of self-immolation."

The barrage of bad news has spurred investors to hammer high-flying stocks such as Tesla and Nvidia, and virtually erase the main US stock indexes' progress since November's election. Markets did rally early Wednesday on hopes for a tariff deal that could deescalate the North American trade war.

A long time coming

If stocks plunge and growth tanks, veteran commentators who've been blowing the whistle on sky-high valuations and macroeconomic headwinds might feel vindicated.

Michael Burry, whose lucrative wager against the mid-2000s US housing bubble was immortalized in the film "The Big Short," is known for making dire predictions and betting against popular assets ranging from Tesla and Nvidia to Apple and the S&P 500.

The Scion Asset Management chief sounded the alarm in 2021 on the "greatest speculative bubble of all time in all things," and declared buyers of meme stocks and cryptocurrencies were barreling toward the "mother of all crashes."

Jeremy Grantham has been issuing similar warnings for years now. The cofounder and long-term investment strategist of asset manager GMO diagnosed the biggest "super bubble" in US history on a recent podcast, adding that stocks would have to crash 50% to trade at historical norms.

Ray Dalio, Jamie Dimon, and even Musk have blown the whistle on threats in recent years. Many commentators have cautioned that historic inflation, onerous amounts of debt, and higher interest rates could squeeze households and entire sectors such as regional banks and commercial real estate into submission.

'Trumpcession' fears

Other market whizzes, including hedge fund manager David Einhorn and "Black Swan" investor Mark Spitznagel, have called out epic levels of speculation among investors and cautioned they're marching toward disaster.

While inflation has cooled from the 40-year high of more than 9% reached in mid-2022, and the Fed has cut rates by 100 basis points from their September peak, Trump's policies are casting dark clouds over that brightening backdrop. The outcome could be a Trump-induced recession, or "Trumpcession."

Nobody can fully predict whether more stock-market pain lies ahead or the economy is about to tank — but investors have definitely been warned about stormy times ahead.