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Bull vs. Bear: Rosenberg and Yamarone debate 2014 economy

Daily Ticker

What’s to come for the economy in 2014?

Bloomberg Economics economist Rich Yamarone describes existing economic conditions as cloudy with a chance of storm. He puts the probability of a recession in the next 12 months at “upwards of 50%."

Why? Yamarone tells us in the accompanying video it’s because of the lack of real income growth (needed to fuel the economy), coupled with the lack of fiscal and monetary stimulus. He cites the Fed’s recent announcement of tapering as evidence that monetary policy isn’t getting easier. He expects fiscal policy to be restrictive again in 2014 -- with Democrats wanting to raise taxes while Republicans want to cut services.

Related: Jim Rickards: Don’t worry Wall Street, the Fed’s (still) got your back 

Then there’s bear-turned-bull David Rosenberg, the chief economist and strategist at Gluskin Sheff and Associates. He says the odds of recession in 2014 are practically zero.

Why? He argues markets are inherently forward-looking and stocks are usually smarter than the typical economist. According to Rosenberg, the U.S. has never been in a recession after a 20% gain in the stock market. He says economic growth averages almost 4% when markets are at record levels.

Check out a video to see Yamarone and Rosenberg debate!

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