(FORTUNE Magazine) – Timing is everything, especially on Wall Street. Last November, Merrill Lynch fired its chief economist, Bruce Steinberg, a 16-year Merrill veteran who had held the post for five years. A perma-bull, Steinberg rose to prominence during the '90s, but as the recession dragged on his bosses deemed him out of sync with the times (so, too, did Merrill's clients, who were suffering through the worst market conditions in years). The irony? Just as Steinberg was on the way out, the recovery that he had been predicting for years finally gained traction.

So along comes his replacement, David Rosenberg. Plucked from obscurity, Rosenberg had been working in Merrill's Toronto office for three years as chief Canadian economist. (How many economists does it take to cover Canada?) But Rosenberg was exactly what Merrill brass wanted--someone skeptical about the recovery and not afraid to say so. Trouble is, Rosenberg has stayed glum, but the economy keeps improving. Today he's one of the few bearish economists on Wall Street.

"There's pressure to turn more optimistic, especially when we get a good quarter of growth," he admits. "After three years of bad economic news, people only want an upbeat story, but I think we're quite a long way from that happening." Rosenberg believes he's on pretty safe historical ground. "Long cycles, followed by bubbles, then rampant monetary easing and mild recessions, are followed by elongated transition phases," he explains. He thinks it could be years before the next strong upswing begins.

Rosenberg isn't predicting another recession or any other economic catastrophe such as deflation. After a strong third quarter, he expects growth to slow and average just above 3% next year. In contrast, the consensus on Wall Street is that the economy will take off after the third quarter and grow at an average rate of more than 4%. It's only a percentage point or so, but there's a major difference between the two scenarios: If Rosenberg is right, jobs will remain scarce, pay raises limited, consumers cautious, and profits disappointing. If Wall Street is correct, it's a return to the second half of the 1990s.

What really sets Rosenberg apart from his competitors, though, is his relentless analysis of the darker side of the U.S. economy. He writes fervently about historically high debt, low savings, and a reliance on foreign investment. "My sense is that the world is looking longingly and nostalgically at the U.S. consumer, that critical 20% of the world economy that powered everybody to prosperity," he says. "I just don't believe this is going to be the tide that lifts all economic ships in the next five to ten years."

Rosenberg's gloomy talk has drawn ire from some of Merrill Lynch's clients. "Clients will say to me, 'You're from Canada aren't you? Well, then I wouldn't expect you to understand the power of the American psyche or the power of the American consumer.'" Though the American consumer has shown no sign of letting up, chances are that one day Rosenberg, just like Steinberg, will be right. It all comes back to the small matter of timing. --Anna Bernasek