The U.S. economy is at the onset of the first consumer recession since the early 1990s, and it's facing headwinds comparable to the six-quarter recession that pushed the Standard & Poor's 500 Index down 40 percent in the 1970s, said David Rosenberg, chief North American economist for Merrill Lynch.
"We've gone from housing to credit to employment, and now I think we're going to start to see some negative consumer spending numbers now that we're past this fiscal stiumulus program," Rosenberg said, in an interview on CNBC.
Rosenberg's economic outlook turned negative when housing began to roll over, he said, comparing it to the 1980s crisis that ultimately led to lower consumer spending.
Even the positives the economy has seen, such as better-than-expected report on gross domestic product growth and corporate earnings reports, were purely due to leverage, he said.
"Amidst one of the biggest tax stimulus of all times, companies liquidated $62 billion inventory in the second quarter," he said. "I think that what we're trying to do is come to grips with the end of a 20-year secular credit expansion that went parabolic in the past six years," he said.