David Rosenberg: Recession Is Already Here & the Fed Is Blind to It | Part I of II

Jun 5, 2025

In this enlightening conversation, David Rosenberg, founder of Rosenberg Research and former chief economist at Merrill Lynch Canada, argues that the recession is already underway. He critiques the Fed's missteps, particularly Jay Powell’s fixation on his legacy while ignoring economic signals. Rosenberg reveals how post-COVID stimulus has masked underlying issues, discusses the troubling state of consumer confidence and the housing market, and highlights AI and data centers as the lone stronghold in the economy. His insights challenge conventional economic narratives and spark urgent dialogue.

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INSIGHT

Recession Already Started

The US recession likely began earlier than commonly thought.
Post-COVID stimulus masked underlying economic contraction initially.

INSIGHT

Stimulus Masked Fed Tightening Effects

Massive $2 trillion stimulus absorbed fully into the economy, unlike usual half spend-half save pattern.
This fiscal support offset the Fed's aggressive rate hikes in 2022-2023.

INSIGHT

Tight Fed and Fiscal Drag Now Evident

Without fiscal stimulus now, tight Fed policy impacts are more apparent.
Beige Book shows 75% of US economy contracting or stagnating, signaling recession underway.

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David Rosenberg says the U.S. recession isn’t coming, it’s already here. In this urgent interview with Trey Reik (Part I of II), Rosenberg explains how trillions in post-COVID stimulus masked economic pain, why that fiscal support is now gone, and how Wall Street is misreading the signals.

He breaks down the Fed’s biggest policy errors, including Jay Powell’s obsession with legacy over leadership. Rosenberg warns that the Fed is ignoring its own Beige Book and that both soft and hard data now point clearly to contraction. From consumer stress and housing unaffordability to labor market weakness and collapsing business investment, the red flags are multiplying.

Key topics discussed:

Why Rosenberg thinks the recession has already started
The Fed’s credibility crisis and Powell’s “legacy problem”
How government stimulus distorted the economy
Rising uncertainty from trade and tariffs
Housing and labor market red flags
The only sector still showing strength: AI and data centers
Why Treasuries are his top conviction trade

This is Part I of a 2-part interview. Part II will be released next Monday. Subscribe and turn on notifications so you don’t miss it!

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Chapters:
1:02 - The Last Time Rosenberg Was Bullish, and What Changed

5:55 - 2022-2023: The Recession That Never Came. What Went Wrong?

19:47 - Soft Data Says GDP Is Shrinking

26:07 - Are the Job Numbers Real… or a Mirage?

33:03 - Powell’s Fed: Legacy or Liability?

38:26 - Was 2021’s QE the Biggest Policy Mistake Ever?

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