Record High For Dow, Yet Economist David Rosenberg Flags Caution: 'Powell Didn't Want To Talk About A Hard Landing On The Podium'

The Dow Jones Industrial Average soared to a new record high on Wednesday, driven by the Federal Reserve’s signals that inflation concerns are abating. Nevertheless, veteran economist David Rosenberg has aired a cautionary note.

What Happened: Despite promising indicators indicated by the Fed, Rosenberg, president of Rosenberg Research, issued a warning to investors, Business Insider reported. In a series of posts on X, formerly Twitter, Rosenberg pointed out the overvaluation of stocks suggested by the Fed’s recent growth projection and the inevitability of an impending recession.

“Powell didn't want to talk about a hard landing on the podium, but the Fed's 3.8% nominal GDP growth projection for 2024 gave us the answer in any event… this has a 90% recession probability attached to it. Shhhhhh…,” Rosenberg wrote on X.

The Fed’s most recent meeting saw Chair Jerome Powell express positivity, citing slowed price growth in recent months, historically low unemployment figures, and strong economic output.

It hints at decreasing inflation fears, coupled with plans to cut interest rates three times in 2024, instigated a market rally.

See Also: Will Unemployment Spike In 2024? History Of Fed Rate Cuts Would Suggest So

Powell didn't want to talk about a hard landing on the podium, but the Fed's 3.8% nominal GDP growth projection for 2024 gave us the answer in any event… this has a 90% recession probability attached to it. Shhhhhh…. pic.twitter.com/l1YmLf7vfn

— David Rosenberg (@EconguyRosie) December 13, 2023

“What was delayed in 2023 shall not be derailed in 2024,” he added

Why It Matters: The significance of the Federal Reserve’s final meeting of 2023 is beyond the immediate rate decision. Following the November inflation test, markets were anticipating an even tougher challenge from the Federal Reserve. With the hiking cycle almost certainly concluded, the rates are expected to stabilize between 5.25%-5.50%. The meeting was pivotal as investors closely monitored the central bank’s outlook on monetary policy.

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