Additional Coverage:
- ‘Something has been changing’: Why a top economist is still worried about a recession even as the US economy keeps growing (newsbreak.com)
Economist David Rosenberg of Rosenberg Research has indicated that the likelihood of a recession in the US is increasing. His research shows that nearly half of the recession indicators he monitors are now suggesting an economic downturn could be imminent.
Rosenberg points out that 45% of these indicators have already been triggered as of now, compared to just 10% last year. This increase has steadily risen to about 25% throughout 2023, reaching its current level midway through 2024.
Among the indicators signaling trouble are the Sahm Rule, the Leading Economic Indicator Index, and the inverted yield curve. However, manufacturing and transportation sectors, which also feature in his list of indicators, continue to perform well.
Despite recent robust economic data, including an unexpected hike in second-quarter GDP growth to 3% and solid retail spending figures, Rosenberg argues that the set of indicators he tracks are historically reliable signs of a recession. He underscores that since 1999, whenever such a significant proportion of these indicators were triggered, a recession inevitably followed.
Given the growing recession warnings, Rosenberg advises that investors should consider safeguarding their portfolios by incorporating “recession-proof” assets like Treasurys, gold, and defensive stocks, such as utilities and consumer staples, to weather potential economic storms.