2026-01-05 00:20:55

Senior economic analyst Rosenberg recently released a thought-provoking economic outlook, directly suggesting that by the end of 2026, the US unemployment rate could rise to 6%, at which point the Federal Reserve may be forced to implement an aggressive 125 basis point rate cut, lowering the federal funds rate to around 2.25%. This forecast diverges significantly from mainstream Wall Street views.

Looking at employment data, warning signs have already emerged. The unemployment rate has risen from 4% in early 2025 to 4.6% in November, with the October layoff rate reaching 1.2%, a one-year high. Demand for hiring has noticeably declined, and the labor market confidence index has returned to pandemic levels. Although unemployment benefit applications remain low, this mostly reflects the lagging effects of severance buffers. Tariff policies have resulted in the loss of over 70,000 manufacturing jobs, and the number of business bankruptcies continues to rise, with employment growth expected to stagnate in 2026.

Beneath the seemingly impressive GDP growth rate of 4.3%, structural issues are hidden. Growth is mainly supported by a contraction in imports, but the cost is a sharp decline in household savings rates and stagnant real income growth. Income inequality is becoming increasingly severe. The consumer confidence index has fallen 28% year-over-year, retail sales growth is only 0.2%, and discretionary spending has been significantly compressed.

Regarding rate cut expectations, Rosenberg’s judgment differs markedly from most investment banks. Most institutions predict the Fed will cut rates by at most 50 basis points, while internal Fed disagreements over inflation stickiness have reached their highest level since 2019, with hawkish factions still showing clear reservations about further easing.

The deficit continues to expand, reaching a total of $2.8 trillion, while social spending has been cut, raising concerns about the effectiveness of stimulus policies.

As the employment market quietly weakens amid a false prosperity in macroeconomic data, the trajectory of the US economy in 2026 may become the most critical bet for market participants. Whether it’s the unemployment rate surpassing 6% or the Fed implementing large rate cuts, both will have profound implications for crypto asset allocation logic.

View Original

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.

7 Likes

Reward
7
7
Repost
Share

Comment

0/400

GasFeeAssassin

· 6h ago

125 basis points? If the Fed really does that, BTC will soar directly. At that point, the whole world will have to print money to rescue the market.

View OriginalReply0

tx_pending_forever

· 01-06 21:26

Rosengberg's recent predictions sound quite alarming, but we all know that Wall Street's forecasts are rarely accurate... 125 basis points rate cut? Feels like the Federal Reserve isn't that aggressive. The real issue is that these data points are indeed a bit outrageous—GDP up 4.3% but people's savings are falling? Who would believe that? 70,000 manufacturing jobs lost, tariffs are definitely causing trouble... It might really play out next? If unemployment drops to 6%, the crypto market will definitely need to reprice, and that's the key. The biggest uncertainty now is whether the Federal Reserve is willing to truly loosen monetary policy; hawks are still holding back... What does a 2.25% interest rate mean? Do you guys think about what that implies for Bitcoin? The deficit is still at $2.8 trillion and burning—ultimately, it will still rely on printing money to solve it... Just thinking about it is hard to put into words.

View OriginalReply0

LiquidityWitch

· 01-05 00:49

125 basis points? Rosenberg is really hoping the Federal Reserve goes all out, Wall Street folks must be going crazy. If the unemployment rate truly hits 6%, the crypto world will be the safe haven paradise. We need to hold tight for this wave. Tariffs have wiped out 70,000 manufacturing jobs... I feel like I've seen this script before. The result will be a surge in liquidity, and BTC will take off again. GDP growth looks decent, but is it all supported by shrinking imports? Laughable. The false prosperity is most afraid of encountering a real crisis. A deficit of $2.8 trillion is still expanding. This is a clear signal of money printing. Crypto asset allocation needs to be recalculated. Consumer confidence plummeted by 28%. Who would believe in any easing expectations? Hawkish policymakers are subtly preparing a big move. 2026 has truly become a critical point. I bet the unemployment rate will break 6% first, and that will be the best time to get in.

View OriginalReply0

AmateurDAOWatcher

· 01-05 00:45

Damn, 125 basis points dropped directly? If the unemployment rate really hits 6%, I want to see how the crypto world can still hold up. --- Basically, it's just GDP inflated on paper. Consumer confidence down 28%, who would still dare to buy in? --- If Rosenberg's prediction this time turns out to be true, the rate cut cycle will really begin. At that point, Bitcoin will have to take off. --- They lost 70,000 manufacturing jobs but still boast a 4.3% growth rate. Isn't this just superficial prosperity on paper? --- The key is that even within the Federal Reserve, there's fighting. The hawks are still resisting easing. We’ll have to keep watching this drama. --- Continuing to pump the $2.8 trillion deficit balloon—sooner or later, they'll have to face the facts. Who will be paying the bill then? --- Savings rate plummeting, consumption gone again. This mode of collapse seems to be just around the corner, probably next year. --- Not to mention, the retail sales increase of 0.2% looks really uncomfortable—recession signals are flashing brightly. --- Wait, is the 125bp increase he mentioned just the worst-case scenario? Don’t be too scared. --- Here comes the same false prosperity rhetoric again. They said the same thing this time last year...

View OriginalReply0

zkNoob

· 01-05 00:45

125 basis points? Rosenberg is just hoping to see the Fed crash and burn... Just based on this prediction, 2026 will be chaos. --- Unemployment rate over 6% + 125bp rate cut, if this actually happens, the crypto market will go wild, liquidity is really going to splash out. --- Basically, it's a recession expectation. Wall Street folks are still touting 4.3% GDP, laughable. --- Tariff policies have cost 70,000 manufacturing jobs, and that's not even the worst? It's expected to stagnate by 2026, and the Fed will be forced to cut losses then. --- Consumer confidence plummeted 28%, retail growth only 0.2%... Is this considered good data? That's a joke. --- Household savings rate is declining + real income stagnates, normal people are getting poorer, and then they expect rate cuts to save the day? --- Hawks are still tightening, the biggest internal disagreement at the Fed since 2019, indicating chaos on the rate cut path. --- The deficit of 2.8 trillion is still expanding, social spending needs to be cut, where is this money coming from... --- If the unemployment rate really hits 6%, crypto should take off, right? At such times, institutions need to find new assets for risk hedging. --- False prosperity and weakening employment are hitting simultaneously, if 2026 doesn't see a crash, that would be surprising.

View OriginalReply0

DefiOldTrickster

· 01-05 00:44

Haha, once again the big flood of rate cuts. I saw this play out in 2020. 125 basis points? That's nonsense. The Federal Reserve remains hawkish and refuses to loosen up. Rosenberg is overthinking it. The real arbitrage opportunity is in the gap, folks. Rising unemployment ≈ liquidity release ≈ Bitcoin's annualized return taking off. History always rhymes. 40,000 manufacturing jobs lost, retail sales only up 0.2%. What does this data indicate? Liquidity needs an outlet, brothers. A deficit of 2.8 trillion is piling up. The Federal Reserve will ultimately have to surrender. It all depends on who can secure leverage positions on the eve of rate cuts. I've seen too many false booms. The true yield opportunities lie in asset misallocation.

View OriginalReply0

New_Ser_Ngmi

· 01-05 00:36

Wait, 125 basis points? Isn't that just a massive flood of liquidity... Rosenberg, is this guy serious? --- GDP 4.3% looks good, but look at the situation below... This is a typical case of data manipulation. --- 70,000 manufacturing jobs lost, and people are still talking about economic recovery? Wake up, everyone. --- Consumer confidence dropped 28%, that's the real story; everything else is false. --- Is the unemployment rate really 6% or is it 125bp of easing? Neither is good... The key question is which comes first. --- It feels like 2026 is really a watershed year. Now, whether to hold coins or bottom fish, this really can't be decided. --- A deficit of 2.8 trillion... Who will foot the bill? In the end, it's just the printing press spinning in circles.

View OriginalReply0