Highly-regarded economist David Rosenberg was often labeled a "permabear" for his gloomy outlook on the US economy in the past. Now, however, the Chief Economist at Gluskin Sheff has a sunnier outlook for the United States in the coming year.
In an interview with Talking Numbers, Rosenberg explains his new disposition stems from the fact that the US didn't enter a recession. Back in 2012, he forecasted a contraction in the economy this year.
Rosenberg's change didn't happen overnight. "It's been a process for most of this year," says Rosenberg, who had viewed the budget crisis as a potential catalyst for a recession. "We never did fall of the fiscal cliff but we certainly rolled off a very significant fiscal mountain."
"The fact that we didn't actually slide back into recession, in my opinion, that's very significant no matter how weak things are," says Rosenberg. He believes that had there been no federal government sequestration or higher taxes earlier in the year, GDP growth would have been higher, closer to 3%.
Even if the congress and President Obama don't reach a budget deal in December or early next year, Rosenberg doesn't necessarily believe it will do damage to the economy. "There's very little chance that fiscal policy is going to be the tourniquet on the economy next year that it was this year," says Rosenberg. "I think that at the margin, things are going to look quite a bit better for the economy. I know 3% growth doesn't sound very sexy but, in the context of this post-bubble deleveraging cycle, 3% today is what 6% was when I started in the business back in the mid-1980s."
Yet, there's one major economic factor that will make or break the economy in 2014, says Rosenberg. To find out what it is, watch the video above.
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