Tags: david rosenberg | economy | risks | stimulus

David Rosenberg: 'Not Trivial' Risks Are on the Rise

David Rosenberg: 'Not Trivial' Risks Are on the Rise
(Dollar Photo Club)

By    |   Tuesday, 21 June 2016 08:18 AM


David Rosenberg, head economist and investment strategist at Gluskin Sheff & Co., paints a disturbing financial horizon for the U.S. economy amid an ever-increasing storm front of risks.

“The risks are not trivial and are on the rise,” he wrote for Business Insider. “But even if a downturn is averted, we are likely to remain in a stuck-in-the-mud global economy, with no leadership, diminishing returns from monetary stimulus and still little in the way of a fiscal response," he said. "Though some of this could change after the November U.S. election,” he said.

“The U.S. economy has been for some time the proverbial smartest kid in summer school. The best house in a bad neighborhood,” he said.

He cited a litany of dismal economic data:
  • Industrial production is down in six of the past eight months and at a 2.1% annual rate;
  • Core capital goods orders have declined in four of the past six months and at an 8.8% annualized pace over that time frame;
  • Goods-producing employment has fallen for four months in a row, by a 1.2% annual rate;
  • The softness has spilled into the consumer and services sectors, with confidence slipping in three of the past four months to the lowest level since last November.
He isn't alone in his dire view of the economy.

Lawrence Summers, former Treasury secretary and onetime economic adviser to President Barack Obama, warns that the economy is full of warning signs despite relative market stability after some recent volatility.

"I think it is a mistake to be too satisfied with where we have been. If we look at the period from 1929 to 1940 and what happened to G.D.P. [gross domestic product] per adult American and we look at the period from 2008 to 2019 as best we can judge it, it is equivalent," he told the New York Times.  "The odds are better than 50-50 that we will have a recession within the next few years."

Other prominent financial experts aren't so pessimistic.

Newsmax Finance Insider Ed Yardeni, who has been ranked among Wall Street's best economic forecasters, predicts stocks will be 10 percent higher by this time next year.

"Is there a recession around the corner? I don't see it," Yardeni, the president of independent firm Yardeni Research, told CNBC recently. Even as speculation abounds over the Federal Reserve's timing on tightening monetary policy, the market bull believes the trend is still up.

"The bottom line here is even if the Fed [hikes] in June, we are still talking about historically low interest rates," he told CNBC. "I do think that the dollar will continue to strengthen, and I do think some of the panic and concerns about the commodity markets were overdone at the beginning of the year."

(Newsmax wire services contributed to this report).

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David Rosenberg, head economist and investment strategist at Gluskin Sheff & Co., paints a disturbing financial horizon for the U.S. economy amid an ever-increasing storm front of risks.
david rosenberg, economy, risks, stimulus
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2016-18-21
Tuesday, 21 June 2016 08:18 AM
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