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According to David Rosenberg, America could be in recession within six months.
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Top Economist Credit Deterioration in 2018 They warned that it was reminiscent of the 2008 mortgage crisis.
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“I think it will be a miracle if we escape this little recession,” he told Blockworks Forward Guide.
The US economy It is headed for a recession as early as 2024, economist David Rosenberg said.
Thursday interview on Blockworks Forward guidance podcast, the president of Rosenberg Research & Associates said the combination of the Federal Reserve’s historic rate hikes, soft consumer spending and the credit crunch They point to the coming fall.
“If I’m not mistaken, we’ve had the biggest interest rate shock since 1981,” he said. “1981 was followed by 1982, which was not an easy recession down the road. Part of that impact was blunted by the impact of fiscal stimulus, which is now in the rearview mirror.”
“I think it will be a miracle if we escape this little recession,” he added.
He also warned that another rate hike is still possible and how 11 of the past 14 rate hike cycles have ended in recession.
“I’m willing to give it about six months,” he said when asked about his outlook for the recession.
Rosenberg’s view is now not a consensus on Wall Street, and has been tempered by forecasts of a looming recession in 2023. Morgan Stanley economist Seth Carpenter, for example, said earlier this week that inflation and steady growth A recipe for soft-serve cookingAnd Bank of America also shared more. Advanced economic perspective.
In any case, the economist said he overestimated how much consumers would spend on the $2 trillion pandemic-stimulated spending and failed to account for “YOLO” and “FOMO” spending — meaning “you only live once” and “fear of missing out.”
“What we don’t know is what the American consumer will look like when we haven’t seen the full impact of these stimulus checks that were sent in the mail a few years ago,” he said. “Stimulation checks cost every penny.”
In the coming months, the extra money saved for fun and games will instead be used to service debt.
And while austerity is faltering, jobs still aren’t shrinking as quickly as policymakers would like, and retailers like Macy’s, Kohl’s and Lowe’s have reported weak foot traffic, sales and guidance.
“We’re not going to talk about consumer resistance in the next couple of months,” he said.
Meanwhile, he sees the recent spike in credit card delinquencies as reminiscent of the 2008 mortgage crisis. Banks are tightening their lending standards, and Weigh in on the quality of the credit and the users.
“We replaced credit cards with what happened 15 years ago with subprime mortgages,” Rosenberg said.
“This is how recessions start,” he continued. “In a certain asset class, the credit quality starts to erode and now you’re seeing it in credit cards and even if it’s not a home loan, it’s not easy. [like 2008].”
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