Warns of sharp decline in 2024 – E24

David Rosenberg struck a chord before the financial crisis. He believes interest rate increases will push the economy into deeper waters next year.

In light of his bleak forecasts for the US economy, Rosenberg appears much more pessimistic than the market and the US Central Bank.

The fastest period of interest rate hikes since the 1980s is beginning to pay off, Rosenberg wrote in a note, according to Interested in trade.

He heads Rosenberg Research, and previously held a senior position at one of the major US banks, Merrill Lynch.

Households are feeling the consequences of the most aggressive monetary policy tightening since the 1980s. The last time we saw a similar financial burden associated with credit cards and auto loans was during the financial crisis in 2008, he says.

In retrospect, Rosenberg came true to his predictions Before the financial crisisBut he also made a mistake when he waited Stocks decline in 2021. It is known that the economist is pessimistic.

Powerful interest rate medicine

The powerful US central bank, the Federal Reserve, has been raising interest rates from zero to a range of 5.25 to 5.50 over the past two years. The increases are intended to act as a panacea against the high price inflation that has affected large parts of the world.

The idea behind the increases is to slow activity in the economy. Many countries have raised key interest rates at a rapid pace, and price inflation has begun to decline.

Michael Reynolds, a strategist at Glenmede, is concerned about the development and believes the increases could lead to a sustained economic contraction.

– He adds that the clock started ticking early this fall The Wall Street Journal.

Go against the flow

The prevailing market view is that the United States will be able to manage a so-called soft landing. This means that price growth reaches the target of around 2%, without pushing the economy into a sustained recession recessionrecessionThe widely used technical definition of a recession is negative economic growth for two or more consecutive quarters..

The latest figures released in mid-December showed that the price increase has now fallen to 3.1 percent in the United States.

– Recently, the Fed has become more… DuetDuetThe “hawk” and the “two” describe opposing beliefs about the interest rates required by the financial picture. “Hawkers” support raising interest rates, while “doves” want lower interest rates. And Open to three interest rate cuts next year. The market is more positive, said Sarah Medgaard, chief economist at Handelsbanken Earlier in December.

The market priced in a total of six interest rate cuts on Sunday afternoon.

But American economist Rosenberg believes that 2024 will be a difficult year, and compares the development to the path of previous economic crises.

– We experienced a soft landing throughout the year, just as it happened in 1979, 1989, 2000 and 2007. He says the soft landing is the transition, the bridge, from expansion to contraction, which I think will be the story of next year.