Renowned macroeconomist Henrik Zeberg has sent the financial world into a frenzy with a dire forecast on However, this rapid rise is predicted to come to an abrupt end, caused by a devastating macroeconomic downturn, which Zeberg expects will be the most severe since the 1929 crash.
Why a recession will hit the US in 2024/2025
The core of Zeberg’s argument is: seven reasons. Zeberg states: “Our business cycle has sent a recession signal in 2023. Leading indicators have crashed below our equilibrium line. In 80 years of data, our model’s recession signal has NEVER been wrong. No false signals – never!” This model, with its unwavering accuracy over eighty years, is the basis of his grim prediction.
Zeberg also delves into the meaning of interest rate inversion, a well-documented precursor to economic downturns. Despite the signal being dismissed out of impatience by analysts in 2023, Zeberg emphasizes its historical reliability, noting: “From the bottom of the rate inversion, we normally see 12 to 15 months before a recession breaks out. This signal is alive and well!” His comments underline a widespread underestimation of this critical indicator.
The economist further examines the trajectory of US industrial production and draws alarming parallels with the period just before the 2007-2008 financial crisis. He notes a similar pattern of divergence and warns of a sharp looming decline in industrial production, which could signal the start of a recession.
Zeberg’s analysis extends to the housing market, where he highlights the plummeting NAHB index as a key warning sign. “The greater the decline in the NAHB, the greater the increase in unemployment,” he said, pointing to the direct relationship between housing market problems and the broader economy. This situation is exacerbated by rising interest rates, which lead to lower consumer spending and, consequently, an economic downturn.
Moreover, personal interest payments are another cornerstone of Zeberg’s argument. He points to the historical pattern where increases in market interest rates burden consumers with higher mortgage and debt payments, ultimately leading to recessions. “Every rise in interest rates over the years has caused a recession as consumers have to cut back on consumption,” Zeberg warns, highlighting the slowdown inherent in the economic business cycle.
Housing affordability, or lack thereof, is also a crucial part of his analysis. With affordability falling below pre-financial crisis levels, Zeberg paints a bleak picture of the near future, where a worsening unemployment situation could lead to widespread defaults and a housing market collapse.
Finally, Zeberg points to the inflated inventory levels of retailers and companies around the world. He describes this as a hangover from the 2021-2022 demand hype, driven by stimulus funds that have now dried up. This discrepancy between supply and expected demand, he believes, is a ticking time bomb for the economy.
Bitcoin: A Mirage Before the Storm
In the midst of this terrible economic situation predictionZeberg casts a unique spotlight on Bitcoin. He predicts a short-lived period of euphoria for the cryptocurrency, with its value skyrocketing to an all-time high, possibly between $115,000 and $150,000. He also says provocatively: “@Peter Schiff: See you at BTC = 100X 1 ounce of gold.”
See you at BTC = 100X 1 ounce of gold
— Henrik Zeberg (@HenrikZeberg) January 17, 2024
However, Zeberg warnings that this wave is part of a broader misleading story. “The Soft Landing Narrative is what will dominate at the top of #Equities #Crypto #BTC,” he explains. This story, he believes, is a mirage that will mislead economists and analysts as they try to rationalize the ‘blow off top’, a phenomenon they could not have predicted.
The reality, as Zeberg sees it, is very different: “Stock market and Crypto will rise in early 2024. Euphoria will develop. Everyone will get on the wrong side of the boat – just like stock and crypto markets form a big top. The recession will start a few months later, in 2024.”
In conclusion, Zeberg’s analysis predicts a major recession, a recession that he believes is inevitable and imminent. “The Titanic has already hit the iceberg – and it will sink,” he notes grimly, dismissing any intervention by the Fed or any government as futile.
The question is how Bitcoin might behave in a recession, something the cryptocurrency has not experienced since its inception in 2009. Will BTC become a safe haven, or will it follow the fate of stocks as Zeberg predicts?
At the time of writing, Bitcoin price continued its sideways trend and was trading at $42,392.
Featured image of DALL·E, chart from TradingView.com
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