Recently, the financial world has been flooded with a major warning—Rosenberg, known as the "Wall Street Prophet," has made a bold prediction, stating that the US labor market is shrinking rather than cooling down, and the unemployment rate could soar to 6% by the end of the year. According to his logic, an economic recession will force the Federal Reserve to aggressively cut interest rates by 125 basis points, ultimately bringing the federal funds rate down to 2.25%. This forecast is completely opposite to the mainstream market consensus and diverges from the Fed's official guidance, sparking widespread controversy.

In fact, employment data has been flashing red for some time. The unemployment rate has risen from 4% at the beginning of 2025 to 4.6% in November, with the October monthly layoff rate reaching 1.2%, a nearly one-year high. Hiring has slowed significantly, and confidence in the labor market has returned to levels seen during the pandemic in 2020. Even more concerning, although unemployment benefit applications remain low and seem stable, Rosenberg believes this is just an illusion caused by companies using severance packages as a buffer. Tariff policies have already led to a reduction of over 70,000 manufacturing jobs, a wave of bankruptcies is spreading, and employment growth in 2026 may come to a complete halt.

So why is the economy still maintaining a GDP growth rate of 4.3%? Rosenberg offers a harsh answer—it's merely a false prosperity supported by tariffs. While shrinking imports have indeed boosted growth figures, the cost has been a sharp decline in household savings rates and stagnant personal income. The economy is showing a clear "K-shaped" divergence, with ordinary people's consumption demand weakening significantly. Consumer confidence index has dropped 28% year-over-year, retail sales growth is only 0.2%, and non-essential consumption has been sharply cut back.

Disagreements over interest rate cuts have become intense. Rosenberg insists that these worsening economic indicators will ultimately force the Fed to loosen monetary policy significantly, but most Wall Street investment banks are only expecting a 50 basis point cut. Internal divisions within the Federal Reserve have reached their highest level since 2019, with some officials even advocating to keep rates unchanged. The core disagreement centers on inflation expectations—Rosenberg believes prices will stabilize, but hawkish officials remain wary of sticky inflation and its potential for recurrence.

Another idea is to stimulate the economy through tax cuts, but this approach seems to be a band-aid solution, adding $2.8 trillion to the deficit and cutting various social spending. The job market is bubbling beneath the surface, economic data is just for show, and policymakers are arguing—2026's US economy is indeed at a crossroads. What do you think? Will Rosenberg's doomsday prediction come true? Which is more likely to happen first: a 6% unemployment rate or a 125 basis point rate cut?