Economist Nouriel Roubini calls predictions of a shallow recession ‘delusional’
Economist Nouriel Roubini, who correctly predicted the 2008 financial crisis, thinks the US is headed for a deep recession and said those who claim the downturn will be mild are “delusional”.
“There are many reasons why we are going to have a severe recession and a severe debt and financial crisis,” Roubini said. said on Bloomberg TV Monday. “The idea that this is going to be short and superficial is totally delusional.”
Instead, he predicts a deep and hard-hitting recession due to rising interest rates and high debt ratios in the wake of the COVID-19 pandemic.
Unlike the recession of the 1970s, when the debt ratio was low despite “stagflation” – a combination of stagnant growth and high inflation – the national debt has soared since 2008 and was then followed by a period of low inflation due to a credit crunch and a sudden demand shock. , he said.
“This time we have stagflationary negative global supply shocks and historically high debt ratios,” Roubini said. “In previous recessions, like the last two, we have had massive monetary and fiscal easing. This time we are entering a recession by tightening monetary policy. We have no fiscal space.
Roubini is the CEO of Roubini Macro Associates and earned the nickname Dr Doom for his grim predictions.