Brace for ‘Crash Landing’ As US Economy Heads for Recession: Rosenberg

David Rosenberg. Rosenberg Investigation &amp Associates

• David Rosenberg has warned the US economy is headed for a “crash landing” or important downturn.
• The veteran economist cited the Philly Fed’s manufacturing survey, a verified recession indicator.
• Rosenberg told Insider in February that the S&ampP 500 could plunge 25% from its current level.

Do not hold out hope for a mild downturn, as the US economy seems set to endure a critical recession, David Rosenberg has warned.

“Take a terrific challenging seem at this chart and inform me we are heading into a ‘soft’ or ‘no’ landing,” he tweeted on Thursday. “A lot extra like a ‘crash’ landing.”

The veteran economist was referring to the Philly Fed’s month-to-month survey of suppliers, which recorded its seventh consecutive damaging reading in March. A lot extra than 34% of the firms surveyed reported declines in activity, and each and every new orders and shipments hit their lowest levels since May possibly possibly 2020.

Rosenberg attached a chart displaying the metric has unfailingly plunged via each of the preceding eight recessions.

“Philly Fed at a level that is eight for eight on the recession make contact with and with no head fakes,” Rosenberg pointed out.

The Rosenberg Investigation president and former chief North American economist at Merrill Lynch has been sounding the alarm on financial markets and the economy for a when.

“A single distinct added sign that Powell’s lastly drained the final ounce of punch out of the bowl,” he tweeted earlier this week, referring to Fed Chair Jerome Powell. He was commenting on the truth that stocks did not rally, regardless of mounting expectations that the Fed will not hike interest rates this month.

“Smacks of a crisis of self-assurance,” he added in another tweet this week.

Rosenberg lately told Insider that the inflation threat has faded, and a US recession is virtually assured. He also warned the S&ampP 500 could plummet by virtually a quarter from its current level to about 3,000 points, and residence prices could bottom 25% beneath their peak final year.

Inflation spiked to a 40-year greater final year, spurring the Fed to raise interest rates from virtually zero to upwards of 4.5% extra than the preceding 12 months. Higher rates lift borrowing charges and encourage saving extra than spending, which can curb the pace of worth increases.

Obtaining mentioned that, they can also temper demand, raise unemployment, and drag down asset prices, boosting the probabilities of a recession. In addition, they can spot anxiety on banks’ bond holdings, as bond prices move inversely to interest rates. That was a concern in the sector-shaking collapse of Silicon Valley Bank final week.

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