Prepare for ‘crash landing’ as US economy heads into recession: Rosenberg

David Rosenberg. Rosenberg Investigation & Associates

• David Rosenberg has warned that the US economy is headed for a “crash landing” or deep recession.
• The veteran economist cited the Philly Fed’s manufacturing survey, which is a established recession indicator.
• Rosenberg told Insider in February that the S&P 500 could fall 25% from existing levels.

Never get your hopes up for a mild downturn, simply because the US economy appears set to endure a critical recession, warned David Rosenberg.

“Take a superior appear at this chart and inform me we’re going for a ‘soft’ or ‘no’ landing,” he tweeted on Thursday. “Extra like a ‘crash’ landing.”

The veteran economist was referring to the Philly Fed’s month-to-month survey of companies, which posted its seventh straight adverse reading in March. Extra than 34% of firms surveyed reported a decline in activity, with each new orders and shipments hitting their lowest levels due to the fact May perhaps 2020.

Rosenberg attached a chart displaying that the metric has unmistakably fallen for the duration of every single of the final eight recessions.

“The Philly Fed at a level that is eight to eight on the recession contact and no head fakes,” Rosenberg stated.

The president of Rosenberg Investigation and former chief North American economist at Merrill Lynch has been warning about monetary markets and the economy for some time.

“One particular far more sign that Powell has ultimately drained the final ounce of punch from the bowl,” he tweeted earlier this week, referring to Fed Chairman Jerome Powell. He commented on the truth that stocks did not rise, in spite of developing expectations that the Fed would not raise interest prices this month.

“It smacks of a crisis of self-confidence,” he added another tweet this week.

Rosenberg lately told Insider that the threat of inflation has faded, and a US recession is practically assured. He also warned that the S&P 500 could fall by almost a quarter from existing levels to about three,000 points, and that residence costs could fall 25% under their peak final year.

Inflation hit a 40-year higher final year, prompting the Fed to raise interest prices from close to zero to far more than four.five% more than the previous 12 months. Greater prices raise borrowing fees and encourage saving more than consumption, which can curb the pace of value increases.

Even so, they can also dampen demand, enhance unemployment and cut down asset costs, growing the possibilities of a recession. Furthermore, they can place stress on bank bonds, due to the fact bond costs move inversely to interest prices. That was a element in final week’s market place-shaking Silicon Valley bank collapse.

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