When the next recession arrives, the Fed may have a few weak weapons in its arsenal if it continues to raise the Fed funds rate this year. But the federal government is already unloading most of its fiscal policy tools at the present, prompting many economists to think current fiscal stimulus will push a recession further into the future than 2019.
But as Rosenberg and others like Morgan Creek Capital's Mark Yusko have noted, the U.S. savings rate is near a historic low at 2 percent, and there are worrying signs like soaring delinquencies in the sub-prime auto loan markets. The notion of consumers being financially prepared for the next downturn is ludicrous.
Those are some of the reasons why Rosenberg believes there will be a recession next year. "In two years, I'll be very bullish," he told attendees.