The US economy is likely to weaken even further next year, but inflation is mainly contained to oil and other commodities, Merrill Lynch economist David Rosenberg told CNBC.
"I actually believe that `09 is going to be weaker than `08," the well-known economist said. "It's not going to be a straight line; not every quarter is going to be bad."
"The capital-goods sector is decent, exports are decent," Rosenberg added. "In terms of the credit crunch, are the numbers coming in broadly above my expectations of three months ago? There's no question, but let's not sugar-coat the situation. It is fraying at the edges right now."
He also said he saw something ominous in the otherwise-positive first-quarter GDP report, something he didn't see in 2001, or in nearly two decades: A slowdown in sales of durable and semi-durable goods.