Economist David Rosenberg warns that the two major engines supporting the U.S. economy are simultaneously stalling, and a severe recession may arrive by 2027.
On March 10, Business Insider reported that Wall Street's well-known bear, David Rosenberg, president of Rosenberg Research, recently stated that as the effects of fiscal stimulus fade and AI-related capital expenditures peak, the U.S. economy could fall into a &#34;very severe recession&#34; by 2027.
He pointed out that after receiving tax refunds this year, American consumers may have a &#34;lifeline&#34; of two to three months, but will face more severe tests thereafter.
Rosenberg also warned that if the stock market experiences a significant correction and the wealth effect is damaged, consumer spending will further shrink, potentially triggering a recession. Meanwhile, the market turmoil caused by the Iran war has prompted Wall Street to reintroduce discussions of recession risks and stagflation expectations.
<h2>Two Pillars Shaking Simultaneously</h2>
Rosenberg believes that the reason the U.S. economy has been able to withstand recession pressures in recent years primarily relies on two forces: massive fiscal stimulus and the AI investment boom.
On the fiscal side, the &#34;Great Beautiful Act&#34; signed by Trump extended the 2017 tax cuts and introduced a series of stimulus measures. According to estimates by the Tax Foundation, this act could boost GDP growth by 1.2 percentage points in the long run.
However, Rosenberg believes this benefit will face risks after the midterm elections in November this year—he predicts that the Democrats may regain control of Congress, leading to legislative gridlock, and fiscal stimulus in 2027 may be &#34;impossible to realize.&#34;
On the AI investment side, Rosenberg pointed out that the capital expenditure boom among tech giants is expected to peak at some point in 2026.
According to Business Insider's analysis of company announcements, the total investment in AI-related capital expenditures by four core AI companies—Amazon, Google, Meta, and Microsoft—is expected to approach $600 billion this year. Rosenberg estimates that if the wealth effect from the rise in tech stocks is taken into account, AI capital expenditures have contributed about 90% to economic growth in recent years.
<blockquote>
&#34;Next year, we will simultaneously remove both crutches, so enjoy while the capital expenditure boom lasts.&#34;
</blockquote>
<h2>Economic Fundamentals Show Cracks</h2>
As the two supporting forces begin to fade, the resilience of the U.S. economy itself is also weakening.
Data from the U.S. Bureau of Economic Analysis shows that the annualized growth rate of real GDP in the fourth quarter was only 1.4%, a significant slowdown from the previous quarter's 4.4% growth rate. The job market is also under pressure, with hiring noticeably cooling and layoffs increasing over the past year.
The pressure on the consumer side cannot be ignored either. The personal savings rate, a key indicator of consumer financial health, fell to 3.6% at the end of last year, down 150 basis points from early 2025
&#34;No job growth means no income growth,&#34; Rosenberg said. &#34;Imagine what would happen if people were forced to tighten their belts and consume based on real income.&#34;
<h2>Stock Market Correction May Trigger Recession</h2>
Rosenberg specifically pointed out the key role of stock market risk in the logic of this recession.
He stated that if the stock market experiences a substantial correction, the wealth effect will weaken, thereby suppressing consumer spending and creating a self-reinforcing cycle of economic decline, ultimately sufficient to trigger a recession.
&#34;Corporate spending will face a vacuum,&#34; he said, &#34;we may face a very severe recession in 2027.&#34;
This warning is not an isolated voice. The market volatility triggered by the Iran war has prompted some on Wall Street to reintroduce recession warnings and stagflation risks into their outlook.
Risk Warning and Disclaimer
The market has risks, and investment should be cautious. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at your own risk

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Economist David Rosenberg warned that the U.S. economy may face a severe recession in 2027, primarily due to the waning dual support of fiscal stimulus and AI investment. He pointed out that while tax rebates this year may provide short-term support for the economy, a significant market correction could further shrink consumer spending, potentially triggering a recession. Additionally, the market turmoil caused by the Iran war has also brought recession risks back into focus

- Economist David Rosenberg warns that the two main engines supporting the U.S. economy are faltering, potentially leading to a severe recession in 2027.  
- He notes that current fiscal support effects are waning and AI-related capital spending is reaching its peak, with consumers facing increased challenges post-tax refunds.  
- Rosenberg emphasizes that a significant stock market correction could trigger reduced consumer spending, which may catalyze a recession, alongside growing recession and stagflation risks amid market volatility from geopolitical events.

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