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

2026-01-05 00:38:15

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BlockBeats News, January 5 — Former Merrill analyst David Rosenberg stated that the U.S. 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 U.S. 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 ensuing 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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