Another recession is 'one small shock away': Rosenberg

The US economy is teetering on the brink of a second recession—not a double-dip—even though the stock market remains strong, economist David Rosenberg told CNBC.

David Rosenberg
David Rosenberg

With unemployment high, housing slumping and Washington locked in a heated debt debate, the Gluskin Sheff strategist warned that it won't take much to trigger another downturn.

"Everything is telling you how soft the underbelly of the economy really is," Rosenberg said. "We're just one small shock away from the economy going back into recession."

A consistent economic bear, Rosenberg nonetheless said the stock market has performed welldue to swelling corporate profits and general optimism that the nascent second-quarter earnings season will be strong.

"I don't think the stock market can stay divorced from the economy indefinitely," he said.

Gross domestic product remains mired below 2 percent and is below par for an economy that officially emerged from recession status two years ago. A recession is generally defined as two consecutive quarters of negative growth.

Since the end of the financial crisis there has been consistent speculation over whether the economy might double dip, or enter into another quarter of negative growth.

But Rosenberg said that from an academic perspective, another negative period would be considered a separate recession.

"It is absolutely not normal to have two soft patches this close together nearly two years after the recession ends. It doesn't happen," he said. "This will be two separate recessions."