"Not everything is coming up smelling like roses, as the consensus narrative and Fed commentary would have you believe," Rosenberg said.
CNBC
The prevailing narrative right now is that the US economy is booming. But top economist David Rosenberg says not so fast.
The Rosenberg Research president says that while many people are touting strong GDP, job-market, and consumer-spending data, red flags remain.
He first notes (1) housing starts, or the number of new homes for which construction has started, which fell 15% in January. There's also (2) industrial production, which fell 0.1% last month after a flat December. Rosenberg says the third negative signal is (3) retail sales volumes, which fell 1.1% in January.
"Yet the narrative is about how we have a roaring economy on our hands," he wrote.
Rosenberg said another perhaps overlooked issue with the economy is that (4) aggregate hours worked are contracting. By his calculation, productivity would have to expand at an anomalous rate in order to hit the Atlanta Fed's current first-quarter GDP target, something he assigns just a 1-in-20 probability of occurring.
Lastly, Rosenberg noted a January (5) contraction in the Chicago Fed's National Activity Index, which contains 85 macro variables, and is a measure he views as the "most comprehensive and timely monthly measure of economic activity." He said the three-month average for the indicator has been negative for each month since October 2022, and is currently implying real GDP growth of less than half of the Atlanta Fed's 2.9% target.
"All of this is very hard to comprehend, unless you are looking only at GDP and headline nonfarm payrolls," Rosenberg wrote. "Not everything is coming up smelling like roses, as the consensus narrative and Fed commentary would have you believe."
