Legendary economist David Rosenberg says the latest US jobs report failed a crucial test – and warns recession is ‘right around the corner’


  • David Rosenberg, the chief economist and strategist at Gluskin Sheff, said the latest jobs report showed a recession is coming very soon.
  • t

  • Both the truck-transportation and durable-goods-manufacturing sectors lost jobs in September, even as the economy added jobs overall.
  • t

  • Rosenberg said that weakness was going to spread and bring down the ongoing decade-long economic expansion.
  • t

  • His view on the jobs report is influenced by Dow theory, a technical indicator that says industrial and transportation stocks both need to be rising in order for the market to make sustained gains.
  • t

  • Click here for more BI Prime stories.

Friday’s jobs report can be interpreted in a lot of ways, and David Rosenberg, Gluskin Sheff’s chief economist and strategist, is interpreting it as a major warning.

Rosenberg has been bearish on the market for a long time, and he argues that within the solid but mixed jobs report is one major cause for concern. So he’s reiterating his recent call for a recession.

The jobs data included slightly disappointing hiring and slowing wage growth as trade tensions and general uncertainty continued to grow. Rosenberg is focused on something he considers an important indicator: job losses in a couple of critical parts of the economy.

He specifically noted that about 4,000 jobs were lost in both durable goods manufacturing and truck transportation in September.

“Payrolls failed the Dow Theory test in September,” Rosenberg wrote in a tweet. “Both industrials and transports posted job declines of 4k. Recession hasn’t arrived but is right around the corner.”

In its simplest form, Dow theory says that for a market rally to last, both the Dow Jones Industrial Average and the Dow Jones Transportation Average need to be rising because their gains suggest that two critical parts of the economy are flourishing.

Rosenberg is extending that idea by arguing that job losses in those sectors mean the economy is getting worse. The manufacturing sector is already in a recession, and in a recent Business Insider interview, Rosenberg added that a number of parts of the US economy, such as construction, capital spending, and housing, were faring just as badly.

Read more: Morgan Stanley says WeWork’s failed IPO marks the end of an era for unprofitable unicorns – and explains why it leaves the market’s tech kingpins vulnerable

While the economy and market have held up in the past few years despite Rosenberg’s forecasts, his track record is worth noting: He was one of the first experts to warn about the downturn that came to pass as the Great Recession.

In Rosenberg’s telling, the only thing that’s kept the economy and the market going is continued spending by consumers – the largest part of the US economy. But if hiring and wages are starting to slow down, and demand for manufacturing and shipping of goods is fading, that’s a sign that strength might not last much longer.