July 13, 2024

Economist’s Warning: U.S. Economy on the Brink of Recession in 2024

New Model Indicates 85% Chance of Economic Downturn, Highest Since 2008
Renowned economist David Rosenberg has unveiled a stark prediction for the U.S. economy in 2024: according to his latest economic model, a recession is imminent, with an alarming 85% probability.
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New Model Indicates 85% Chance of Economic Downturn, Highest Since 2008

Renowned economist David Rosenberg has unveiled a stark prediction for the U.S. economy in 2024: according to his latest economic model, a recession is imminent, with an alarming 85% probability.

Unveiling the Full Model: A Comprehensive Outlook

Rosenberg’s Model, aptly named the “full model,” incorporates a range of economic indicators, including financial conditions indexes, the debt-service ratio, foreign term spreads, and the yield curve’s level. It’s a sophisticated tool built upon a solid foundation, drawing insights from a working National Bureau of Economic Research paper.

Echoes of History: Recession Risk Reaches Heights Unseen Since 2008

The gravity of the situation becomes apparent when considering the historical context. This 85% reading marks the highest recession probability since the Great Financial Crisis 2008, sending ripples of concern through economic circles.

Superiority in Prediction: A Track Record of Accuracy

Rosenberg asserts that what sets his Model apart is its track record. Since 1999, it has consistently provided timely warnings of recessions without succumbing to false alarms—a feat that eludes many other models in the field.

Challenging the Narrative: Debunking Notions of a ‘Soft Landing’

In the face of optimism surrounding a “soft landing” or even a scenario of no landing, Rosenberg’s Model offers a sobering reality check. The data suggests that such hopes may be unfounded, with recession probabilities looming large on the economic horizon.

Implications for Investors: Brace for Impact

The implications are profound for investors. Rosenberg warns that if a recession materializes, it could spell disaster for the stock market. Despite this, asset classes must still prepare for such an outcome, highlighting the urgency for proactive measures.

Understanding the Yield Curve Conundrum: Insights from the Model

Rosenberg’s model also illuminates the mystery surrounding the yield curve’s failure to predict recessions accurately in recent years. These anomalies are explained by accounting for easy financial conditions and favorable foreign-term reads.

In summary, Rosenberg’s Model paints a grim picture for the U.S. economy in 2024, challenging prevailing narratives and urging stakeholders to brace for impact. As the recession specter looms, the need for proactive measures and informed decision-making has never been more pressing.

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