Analysis: The shrinking job market will force the Federal Reserve to cut interest rates by 125 basis points consecutively to 2.25%

GateUser-6433627c · 2026-01-05T00:37:54+00:00

Former Merrill analyst David Rosenberg predicts that the US economy will face difficulties in 2026, with unemployment possibly exceeding 5% and testing 6%. The shrinking labor market will force the Federal Reserve to cut interest rates significantly, with an expected cut of 125 basis points to 2.25%.

GateUser-6433627c

2026-01-05 00:37:54

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On January 5th, former Merrill analyst David Rosenberg stated that the US economy will face significant difficulties in 2026, with the job market likely to contract sharply, thereby weakening the economy and forcing the Federal Reserve to respond with substantial rate cuts. The biggest surprise will be that people realize the labor market is not cooling down but shrinking. David Rosenberg believes the US unemployment rate will soon surpass 5%, and by the end of the year, it is likely to test 6%. The collapse of the labor market and the subsequent recession will force the Federal Reserve to cut interest rates by 125 basis points to 2.25% before the end of 2026, a total of five 25 basis point rate cuts.

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