March 21, 2023 11:16 pm

David Rosenberg. Rosenberg Investigation &amp Associates

  • David Rosenberg has warned the US economy is headed for a “crash landing” or big 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 present level.

Never hold out hope for a mild downturn, as the US economy appears set to endure a extreme recession, David Rosenberg has warned.

“Take a great difficult appear at this chart and inform me we are heading into a ‘soft’ or ‘no’ landing,” he tweeted on Thursday. “Additional like a ‘crash’ landing.”

The veteran economist was referring to the Philly Fed’s month-to-month survey of producers, which recorded its seventh consecutive damaging reading in March. Additional than 34% of the firms surveyed reported declines in activity, and each new orders and shipments hit their lowest levels given that May perhaps 2020.

Rosenberg attached a chart displaying the metric has unfailingly plunged for the duration of every of the previous eight recessions.

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

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

“A single added sign that Powell’s ultimately 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 reality that stocks did not rally, in spite of mounting expectations that the Fed will not hike interest prices 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 practically assured. He also warned the S&ampP 500 could plummet by practically a quarter from its present level to about three,000 points, and residence costs may well bottom 25% beneath their peak final year.

Inflation spiked to a 40-year higher final year, spurring the Fed to raise interest prices from practically zero to upwards of four.five% more than the previous 12 months. Greater prices lift borrowing charges and encourage saving more than spending, which can curb the pace of cost increases.

Having said that, they can also temper demand, boost unemployment, and drag down asset costs, boosting the possibilities of a recession. Furthermore, they can place stress on banks’ bond holdings, as bond costs move inversely to interest prices. That was a issue in the marketplace-shaking collapse of Silicon Valley Bank final week.

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