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Last updated Nov 29, 2025
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Friedberg @ 01:42:16Wrong
economymarketstech
From mid‑2024 onward, the U.S. will experience an economic slowdown with reduced enterprise spending and lower conversion to new tech purchases, leading to valuation multiple compression across public technology stocks and initiating a sustained period of market contraction in the sector.
we are seeing an economic slowdown underway. There is going to be reduced spending. There is going to be reduced conversion of enterprise customers to buy anything... you are going to see multiple compression... This could be the beginning of what I think might be a slow contraction.View on YouTube
Explanation

Why this prediction missed

  1. No sustained U.S. economic slowdown from mid‑2024 onward. Real U.S. GDP grew at a 2.8% annualized rate in Q3 2024 and 2.3–2.4% in Q4 2024, with full‑year 2024 growth at 2.8%—above the post‑2000 average.(cnbc.com) After a brief 0.5–0.6% contraction in Q1 2025, GDP rebounded sharply to about 3.8% annualized in Q2 2025.(tradingeconomics.com) That pattern (solid 2H24 growth plus a one‑quarter dip followed by strong re‑acceleration) is not a “slow contraction from mid‑2024 onward.”

  2. Enterprise / IT spending kept growing rather than falling. Gartner’s forecasts through 2024–2026 show rising worldwide IT outlays: up ~7.5% in 2024, with software and data‑center systems growing double‑digits, and further 7.9–9.3% growth projected for 2025, again led by software and AI‑driven infrastructure.(gartner.com) Gartner does note a 2025 “pause on net‑new spending” due to macro uncertainty, but explicitly says this is outweighed by ongoing AI digitization initiatives, not a broad pullback.(gartner.com) That is inconsistent with “reduced spending” and “reduced conversion of enterprise customers to buy anything.”

  3. Tech stocks did not enter a sustained contraction; many hit record highs. The Nasdaq Composite was already near record levels in June 2024 and went on to set new all‑time highs in June 2025, alongside the S&P 500.(marketwatch.com) The Nasdaq‑100 likewise notched a record close of ~22,190 in June 2025 and later, by November 28, 2025, the Nasdaq was up ~21% year‑to‑date.(reuters.com) Sector ETFs focused on software and cloud—exactly the kind of enterprise tech he was talking about—show gains, not a sustained bear market: IGV returned about +27% in 2024 and is modestly positive in 2025 overall,(companiesmarketcap.com) while WCLD shows mid‑teens 1‑year returns as of September 2025 despite volatility.(myplaniq.com) Those trajectories contradict the idea of an enduring sector‑wide contraction.

  4. Valuation multiples did not broadly compress across public tech. As of November 2025, IGV’s price/earnings ratio is around 52, a very elevated level by historical standards,(ishares.com) and market commentary through 2025 repeatedly highlights concerns about stretched AI‑driven tech valuations, not cheapened ones.(apnews.com) Even where there were pockets of de‑rating—e.g., a software ETF falling ~21% from a recent high and CIOs trimming budget growth expectations from 4% to 3% amid tariff worries—analysts still emphasized strong long‑term growth and only modest near‑term caution.(barrons.com) That is a far cry from broad, lasting multiple compression across tech.

Taken together, the data show: (a) continued macro growth with just a brief 2025 soft patch, (b) rising, not falling, enterprise tech spending, and (c) technology equity markets that, while volatile, reached record levels and retained high valuations rather than entering a long, contractionary, multiple‑compression phase. That makes the prediction wrong in both its macro and sector‑specific components.