Top economist David Rosenberg shrugs off fears of stubborn US inflation as prices of many things are dropping fast

• Top economist David Rosenberg brushed off fears of sticky US inflation in a recent tweet.
• "Less sticky than you think, if you actually take the time to look underneath the hood," he said, pointing to recent PCE data.

Top economist David Rosenberg shrugged off fears of stubborn US inflation, flagging that prices of many things are dropping fast.

"Today's 'hot' PCE deflator came down to just three sectors: housing, used cars and financial services. The rest of the index actually came in below +0.2% MoM. Less sticky than you think, if you actually take the time to look underneath the hood," the Rosenberg Research chief said in a recent tweet.

Core US PCE data was released Friday, rising above expectations at 0.4% month-on-month. While housing, transport and financial services contributed to the increase, which led to inflation looking worse than expected, Rosenberg pointed out that the cost of many other things fell in price, including recreation goods, new autos and delivery services.

"Almost two-thirds of that PCE deflator actually came in at +0.1%! The most cyclical segments deflated: Recreation goods, new autos, home improvement, delivery services, air fares, rail transport, car rental, hotels, appliances, and furniture. And I won't back down …" Rosenberg said.

Rosenberg has repeatedly brushed off inflation as a threat since late last year. He has previously argued that the upward pressure on consumer goods costs has dwindled – and predicted inflation could drop to below 2% by the end of 2023.

Inflation has undoubtedly cooled from their mid-2022 highs above 9%, thanks to the Federal Reserve's interest-rate hike regime over the past year. The US central bank has raised benchmark rates above 5%, and that's helped bring inflation down to 4.9% as of April's latest reading.

But unlike Rosenberg, market experts have warned inflation is likely to remain sticky, including Goldman Sachs CEO David Solomon.

In some of Rosenberg's most recent commentary, he has been more bearish about the US economy. The veteran economist recently said a recession has arrived in the US, but nobody's noticed, with the S&P 500 giving away the worrisome sign.