Top Economist Warns of Recession-Style Weakness Amid 4.3% GDP Growth
The Disconnection Between GDP and Industrial Health
Top economist David Rosenberg has issued a dire warning about the state of the U.S. economy, highlighting a stark contrast between the strong headline GDP numbers and troubling industrial data. According to Rosenberg, these industrial indicators suggest a level of recessionary weakness that mirrors the conditions seen during the 2009 financial crisis.
A Closer Look at the Industrial Data
In a recent post on X, Rosenberg, the president of Rosenberg Research, emphasized a significant gap between official government growth figures and actual industrial activity. While the U.S. Bureau of Economic Analysis (BEA) reported a 4.3% annualized increase in third-quarter real GDP—driven by government spending and consumption—Rosenberg points to the Institute for Supply Management (ISM) Manufacturing Report as evidence of a more troubling situation.
The December ISM data reveals that only 11% of U.S. industries reported any growth, a sharp decline from 22% in November and 39% a year earlier. This 11% figure is tied for the second-lowest reading since April 2009, when the Great Recession had not yet reached its peak.
A Hollow Expansion?
The official ISM report confirms the contraction, with the Manufacturing PMI registering at 47.9% in December, marking the 10th consecutive month of decline. Out of 18 manufacturing industries, only two—Electrical Equipment and Computer & Electronic Products—reported growth.
Rosenberg has previously criticized the robust third-quarter GDP numbers as a “fugazi,” or fake, suggesting that once government spending and depleted personal savings are accounted for, real growth is closer to a stagnant 0.8%. This skepticism is supported by the data, which indicates that while the BEA reported increases in consumer spending and exports, the industrial base appears to be shrinking.
Echoes of 2009
The comparison to April 2009 directly challenges the current market optimism. According to Bank of America’s December Global Fund Manager Survey, 94% of investors expect a “soft landing” or “no landing” scenario, with cash allocations at record lows. Rosenberg’s analysis suggests this consensus may be misplaced. By highlighting that industrial participation is currently as narrow as it was during the Great Recession, he argues that the headline GDP strength is masking a severe, localized depression in the industrial sector—a risk seemingly ignored by the 94% of fund managers betting on continued growth.
Market Performance
Despite the warnings, the benchmark indices closed higher on the first trading day of the first full trading week of 2026. The SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust ETF (QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, closed higher on Monday. The SPY was up 0.67% at $687.72, while the QQQ advanced 0.79% to $617.99, according to BisakimiaPro data.
The futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were also higher on Tuesday.
The True Measure of Economic Health
In a related development, another top economist warned that unemployment, not stock prices, is the true measure of economic health. He stated that close to zero jobs have been created since tariffs were introduced, emphasizing the need for a more accurate assessment of economic conditions.
Conclusion
As the economy continues to show signs of strain, the disparity between official statistics and real-world industrial performance raises concerns about the sustainability of current economic growth. With market optimism prevailing, the warnings from economists like Rosenberg serve as a reminder that underlying economic fundamentals must be closely monitored.
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