Top macroeconomist Henrik Zeberg has warned that the global economy is edging closer to a significant recession, potentially the largest since the 1930s.
According to Zeberg, central bank monetary policies over recent years have fueled extreme market overvaluations, creating what he describes as an “everything bubble” that is now nearing its breaking point, he said in an X post on November 26.
His analysis draws on leading indicators from a proprietary business cycle model, which he says has accurately predicted every recession since 1950. These indicators rolled over in November 2024, signaling that the economy is approaching the threshold where a downturn could begin.
While the indicators do not yet point to an active recession, they suggest the economy is “closing in” on one.
Coincident indicators, which Zeberg uses to identify the start of recessions, historically provided early warnings in the months leading up to the 2007‑2008 financial crisis. He noted parallels to that period, emphasizing that his model’s rollover of leading and coincident indicators correctly anticipated the market peak and subsequent economic decline in the mid-2000s.
“The coincident indicators are the ones telling us when it begins, together with our imminent recession indicators. This is when the Titanic actually sinks! Before the great financial crisis they rolled over in November 2007. The recession began December 2007. Market topped October 2007. These are suggesting that we are closing in on a point where it could begin! I say it again. “Closing in”! However, not signalling it just yet – but closing in,” Zeberg said.
Upcoming crypto market rally
Despite these warning signs, Zeberg observed that stock markets and cryptocurrencies are entering a final phase fueled by central bank liquidity. He expects equities, Bitcoin (BTC), Ethereum (ETH), and other digital assets to rally into December, potentially luring investors into a false sense of security.
At the same time, the U.S. dollar appears to be forming a bottoming pattern, which could support a strong rally through 2026.
Zeberg stressed, however, that this final phase of market exuberance should not be mistaken for sustainable prosperity. He highlighted that the economy is slowing, the financial system is heavily overextended, and the looming bubble is likely to burst, potentially triggering a severe crisis.
Overall, the current market picture shows a mix of optimism and underlying tension, echoing many of the concerns raised by Zeberg.
Global markets remain elevated, with equity prices recently surging. In the United States, major indexes such as the S&P 500, Nasdaq Composite, and Dow Jones Industrial Average ended sharply higher in late November, buoyed by hopes of imminent rate cuts by the Federal Reserve.
Despite these rallies, some analysts describe the environment as reflecting “late‑cycle behaviour.” A growing portion of equity gains is being driven by speculative and high‑valuation tech and AI-linked firms. Combined with slowing broad economic momentum, this raises questions about how much longer the rally can sustain itself.
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