The U.S. economy is headed for a hard landing, and Fed rate cuts won’t be enough to rescue it, Citi says

“The next stage of the policy cycle is a weakening of the labor market. Once it starts gradually weakening, it then weakens more sharply. I think that’s exactly what’s playing out now.”

Last year’s consensus was that the U.S. economy was headed for a recession, but that didn’t happen. This year’s consensus is that we’ll have a soft landing, where the economy slows but won’t tip into a recession. That could be wrong too.

Doubling down on his contrarian view, Citi chief U.S. economist Andrew Hollenhorst told Bloomberg TV on Thursday that he sees a hard landing. In fact, inflation and the labor market will weaken enough that the Federal Reserve will cut benchmark rates four times this year—far more than the one or two cuts Wall Street expects.

His warning proved prescient as the Labor Department’s payroll report the following day showed that the economy added 175,000 jobs in April, down sharply from the blockbuster increase of 315,000 in March and well below the 233,000 gain that economists had predicted.

On Thursday, Hollenhorst said other data have been signaling weakness in the labor market, including surveys of consumers and businesses that say jobs are getting harder to find, companies are less eager to hire, and employees are feeling more worried about keeping their jobs.

To be sure, data in recent weeks have offered mixed signals on the economy. The latest employment cost index rose more than expected, suggesting a strong job market. Meanwhile, the first-quarter GDP report showed growth cooled more sharply than anticipated. But that was due largely to a wider trade deficit and slower inventory restocking, while consumer demand remained robust.

But Hollenhorst is convinced there won’t be a soft landing, and said financial markets are starting to move away from that hope as well.

“The reason I think the Fed’s going to see enough to cut is because we’re more toward the hard landing end of the spectrum,” he told Bloomberg TV.

Meanwhile, the Fed won’t wait for both inflation and the labor market to weaken before cutting rates, he noted. It only needs to see one or the other.

When asked if his view for four rate cuts this year also means that they wouldn’t provide enough economic stimulus to stave off a hard landing, Hollenhorst said almost every monetary policy cycle has played out that way.

“We’re in the higher-for-longer stage of the policy cycle,” he explained, noting that stubborn inflation has prevented rates from coming down. “The next stage of the policy cycle is a weakening of the labor market. Once it starts gradually weakening, it then weakens more sharply. I think that’s exactly what’s playing out now.”

In February, even amid blowout jobs reports, Hollenhorst was warning about a harding landing and told CNBC that he expected a recession by the middle of this year.

Looking past the upbeat headline jobs numbers, he said there were signs of softness, such as the number of hours worked and the number of full-time jobs dropping.

This story was originally featured on Fortune.com