Economist: The unemployment rate may test the 6% high by the end of the year, forcing the Federal Reserve to cut interest rates significantly by 125 basis points in 2026.

Deep Tide TechFlow News, on January 5th, according to Jin10 Data, David Rosenberg, who previously worked at Merrill Lynch and has been running his own firm Rosenberg Research since 2020, stated that the US economy will face significant difficulties in 2026. The employment market is likely to shrink sharply, thereby weakening the economy and forcing the Federal Reserve to respond with large rate cuts.

The US unemployment rate has risen from 4% in early 2025 to 4.6% in November 2025. Rosenberg believes that the unemployment rate will soon surpass 5%, and by the end of the year, it is likely to test 6%. Rosenberg stated that the collapse of the labor market and the subsequent recession will force the Fed to cut interest rates by 125 basis points to 2.25% before the end of the year (i.e., five 25-basis-point rate cuts).

It is worth noting that Rosenberg’s views are quite different from the general consensus among Wall Street economists, who expect the labor market to remain stable in 2026, with the Fed making one to two rate cuts. The median forecast of Federal Reserve officials is for one rate cut this year. However, the central bank emphasizes that it sees downside risks to the labor market. The latest staff projections from the Fed indicate that “softening labor market conditions and rising economic uncertainty increase the risk of economic slowdown exceeding expectations.”