David Rosenberg. Rosenberg Research & Associates
David Rosenberg has warned that the US economy is headed for a “crash landing” or major downturn.
The veteran economist cited the Philly Fed’s manufacturing survey, a trusted indicator of a recession.
Rosenberg told Insiders in February that the S&P 500 could plummet 25% from current levels.
Don’t hope for a mild downturn as the US economy looks set to suffer a deep recession, David Rosenberg has warned.
“Look closely at this chart and tell me we’re heading for a ‘soft’ or ‘no’ landing,” he said tweeted on Thursday. “More like a ‘crash landing’.”
The veteran economist was referring to the Philly Fed’s monthly survey of manufacturers, which posted negative results for the seventh straight month in March. More than 34% of surveyed companies reported a drop in activity, and both orders and shipments hit their lowest levels since May 2020.
Rosenberg included a chart showing that the metric has consistently declined during each of the last eight recessions.
“Philly Fed at 8 to 8 in recession and no head fakes,” Rosenberg said.
The president of Rosenberg Research and former North American chief economist at Merrill Lynch has been sounding the alarm in the financial markets and in the economy for some time.
“An additional sign that Powell finally pumped the last ounce of punch out of the bowl,” he said tweeted Earlier this week, referring to Fed Chair Jerome Powell. He commented on the fact that stocks failed to recover despite rising expectations that the Fed will not hike rates this month.
“This smacks of a crisis of confidence,” he added another tweet this week.
Rosenberg recently told Insider that the threat of inflation has receded and a US recession is virtually guaranteed. He also warned that the S&P 500 could fall nearly a quarter from its current level to around 3,000 points and house prices could be 25% off their peak last year.
Inflation hit a 40-year high last year, prompting the Fed to raise interest rates from almost zero to over 4.5% over the past 12 months. Higher interest rates increase the cost of borrowing and encourage saving versus spending, which can slow the pace of price increases.
However, they can also dampen demand, increase unemployment and drag down asset prices, increasing the likelihood of a recession. In addition, they can put pressure on banks’ bond holdings as bond prices move inversely with interest rates. That was a factor in last week’s market-shattering collapse of Silicon Valley Bank.
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