- A recession will surely hit the US economy and stocks will plunge back into a bear market then, David Rosenberg said.
- "The compounding effect of even a mild recession on earnings and what it does to the multiple will still lead you into a fundamental bear market," he told BNN Bloomberg.
Top economist David Rosenberg has once again sounded the alarm on the US economy.
Speaking in an interview with BNN Bloomberg on Thursday, the Rosenberg Research chief said a recession is certain to hit the world's largest economy and US stocks will dip back into a bear market when that happens.
"You're going to hear a lot of this hand-holding, 'don't worry, it's going to be a mild recession, it's going to be a shallow recession.' That doesn't matter. Ultimately you're paying for earnings, not GDP anyways, and the compounding effect of even a mild recession on earnings and what it does to the multiple will still lead you into a fundamental bear market," Rosenberg told the outlet.
He also ripped into the Federal Reserve for its "Bambi-to-Godzilla" approach toward inflation - where the central bank initially didn't react to a pickup in price pressures, only to end up raising interest rates by 500 basis points in 15 months subsequently.
While the Fed is at or near the end of its monetary-tightening cycle, the effects of its rate hikes on the US economy are yet to be felt, Rosenberg added.
The economist further noted there are "signs of cracks emerging in this red-hot US labor market story" after jobless claims stay at its highest level since October 2021.
"What if employment starts to decline or weaken substantially, and we start seeing more downside pressures that we've seen on inflation. Maybe they'll skip," Rosenberg said, referring to chances of another Fed rate pause should economic data weaken in the coming months.
Rosenberg has been pessimistic about the US economy for months now, previously warning that parts of the S&P 500 is already signaling signs of a recession, and the rally in tech stocks this year reminds him of the dot-com bubble in the early 2000s.