The widely followed economist David Rosenberg, known for his early warning of the housing market bubble, now foresees a persistent inflationary trend in the making.
Speaking at the Altegris Investment Conference in Carlsbad, Calif., Friday morning, the Gluckin Sheff chief economist and strategist jokingly referred to star bond manager Jeffrey Gundlach’s quip earlier at the conference that “if you’re early you’re wrong.”
Since inflation won’t be happening by Tuesday, Rosenberg (left) said he was wrong. But longer term, he saw little escape from the conclusion that a secular shift in the economy is at hand. And this despite the current buzz about deflation, he said, citing as one example a recent Barron’s article, A Deflationary Wave.
Rosenberg—whose Breakfast With Dave daily research report is popular in the investment community, even with its $1,000 annual subscription price—opened his session with the announcement that he’s getting divorced—from bonds, he said after a long pause. Bonds perform poorly in periods of inflation.
“We’re closer to the end of QE than people believe,” he said.
The Canadian economist’s key insights concerned the labor market.
“Ninety million adults now reside outside the labor force,” he said. “The Department of Labor should do survey: Are they all on food stamps…or is there an underground economy that we’ve got to capture?”
Rosenberg said he paid special attention to the JOLTS survey, a monthly DOL report on job vacancies. The economist perhaps surprised many people in saying that job openings are up but that “companies can’t find qualified applicants for the jobs they want to fill.”
Yet while hiring thus stagnates, firings are at an all-time low.
“In fact, the number of people getting fired today with a 7.5% unemployment rate is 10% lower than May 2007,” when unemployment was at a trough of 4.4%. That tells me we may be near full employment.”