Analysis: Contraction in the job market will force the Fed to cut rates by a total of 125 basis points to 2.25%.

BlockBeats News, January 5th – Former Merrill Lynch analyst David Rosenberg stated that the U.S. economy will face a severe downturn in 2026, with the labor market likely experiencing a sharp contraction, weakening the economy and forcing the Fed to respond with a significant rate cut. The biggest surprise will be people realizing that the labor market is not cooling down, but shrinking.

David Rosenberg believes that the U.S. unemployment rate will soon surpass 5%, and "is likely to probe 6% by the end of the year." The collapse of the labor market and the subsequent recession will compel the Fed to cut rates by 125 basis points to 2.25% before the end of 2026, with 5 separate 25-point cuts.