Ed Yardeni, chief strategist at Deutsche Bank, paints a bleak economic picture in his latest musings about the United States economy.

Yardeni sees tough times ahead for profits, workers and the economy. Economists are keying on July’s employment report this week, and the view at Deutsche Bank is that the jobless rate will jump to 4.7% from 4.5% and that payroll jobs will fall by 100,000. “I would not be surprised by a bigger job loss, maybe 150,000. Until now, most of the job losses have been in manufacturing and temporary employment agencies.”

He suggests that so far, many of the unemployed have been absorbed by other industries that were hungry for workers, but that the picture could get worse if profits do not recover. “I believe that up till now, companies have actually slashed their capital spending budgets (including on technology) much more aggressively than they reduced their payrolls. If profits don’t recover soon, then the job reductions could be more significant over the rest of the year,” says Yardeni. “Unfortunately, the profits picture is getting darker, in my opinion. The earnings recession isn’t over yet and it may persist through the end of the year.”

Yardeni says he doesn’t expect a rebound in technology sector earnings until after the first quarter of next year. “The global economic outlook is deteriorating, especially in Asia, but also in Europe and Latin America. Energy earnings comparisons should be less favorable through the end of the year.”

Although many are betting that tax cuts and lower energy prices will stave off a full-blown recession, Yardeni says, “If the job losses mount quickly over the next few months, all bets are off on avoiding a consumer-led recession.”

While he says it’s hard to be very bearish when the broad money supply measures are up substantially from a year ago, Yardeni notes that the decline in analysts’ consensus expectations for earnings is tracking the 1991 recession almost exactly. “I have lowered my forecast not only for this year, but also for next year. I have also reduced my recommended stocks/bonds mix from 80/20 to 70/30. While I still see lots of long-term demographic trends favoring consumer cyclical stocks, I am lowering my near-term recommendation on this sector from overweight to market weight.”

Yardeni also suggests that the Fed’s efforts to revive the economy might lead to a housing bubble.