US stocks face a reckoning as there's no escaping a recession, says top economist David Rosenberg

• Top economist David Rosenberg warned that US stocks are in for more pain this year – and rang the alarm on recession risks again.
• "The stock markets and the credit markets seem to think that they have more time than they can buy before the boom really gets lowered on the economy," he said.

US stocks will feel the pinch from the delayed effect of the Federal Reserve's interest-rate hikes, and there's no escaping an economic downturn this year, according to David Rosenberg.

"The stock markets and the credit markets seem to think that they have more time than they can buy before the boom really gets lowered on the economy," the Rosenberg Research chief said Thursday on CNBC, adding that the US economy is not strong.

The economist was speaking of US financial markets' resilience in the face of the Fed's aggressive interest-rate hikes aimed at cooling inflation, and added it's only a matter of time until investors feel the heat. That's because leading indicators suggest a recession is imminent for the US economy.

Inflation surged as high as 9.1% last summer, spurring the central bank to boost rates from nearly zero to just below 5% in the past year. That has seen price pressures ease somewhat in recent months, fueling hopes that the Fed will pivot from its hawkish policy and spurring stock and credit-market gains.

According to Rosenberg, the US will likely slip into recession no later than the second or third quarter of this year. "I don't think we get out of this without a recession," added.

"The timer I see for the market, whether it's credit or equities, has shortened up so much that it's only when they see the whites of the eyes, and I think a lot of it will have to do with employment," he said. "Once employment starts contracting, I think that's where you're going to find the risk-on trade really coming under downward pressure," he added.

Meanwhile, Rosenberg pointed out that an earnings recession is already underway in the US. "What's the stock market not seeing when you're seeing declining earnings, not slowing earnings, and declining earnings estimates?" he said.