This time last year, renowned economist Nouriel Roubini earned the nickname “Dr. Nouriel Roubini.” Wall Street’s pessimistic “doomsday” warning for the market outlook said it would be “mission impossible” for the United States to avoid a severe recession in 2023. At the time, the CEO of Roubini Macro Associates was worried that the Federal Reserve’s inflation rate would reach over 9% in June 2022, the highest level in 40 years, and that the government’s efforts to curb inflation would ultimately lead to a decline in the U.S. economy. Aggressive interest rate hikes stalled.highlight record high Global private and public debt and the economic cost of the war in Ukraine are rising steadily, he predicted “stagflation debt crisis” or even “a variation of another Great Depression.”
But now, Roubini believes the U.S. economy may have avoided those dire fates — at least for now.
“The good news is it doesn’t look like we’re going to have a real hard landing,” he said Tell Bloomberg Monday, citing economists’ favorite metaphor for the recession, the airline industry. “The question is whether we will have a soft landing or a bumpy landing — a bumpy landing is a brief, shallow recession — and that’s a debate we don’t know yet.”
The comments marked a significant shift in tone from Roubini, who said in July 2022 that predictions by his peers at the time of a short and shallow recession were “totally delusional.” But a lot has changed since last July.Federal Reserve Chairman Jerome Powell successfully reduced the inflation rate to 3.7% from 9.1% during the epidemic while maintaining U.S. GDP growth; supply chains that were disrupted during the epidemic have mostly been recovered; Despite a brief regional banking crisis in March, the S&P 500 is up more than 16% year to date.
The good news has even made Roubini more optimistic about the near-term prospects of the U.S. economy, but he remains concerned about a mild recession.
as wealth As previously reported, even the most optimistic forecasters admit that it is too early to declare that the economy has achieved a “soft landing,” in which inflation is under control and rising interest rates do not trigger a job-killing recession. Roubini cited a number of risks that could still send the U.S. economy into a downward spiral, including pressure from “prolonged and volatile lags in monetary policy” and potential “credit issues” that would see a lack of available loans and credit for regional banks facing Businesses with questions offer help.
But perhaps the most credible risk to the economy comes from “sticky” inflation. Roubini pointed out that oil prices have soared in 2023 due to production cuts by OPEC and Russia, and that oil prices have played an important role in rising inflation during the epidemic.In the U.S., West Texas Intermediate crude prices surge 20% Having risen from $91 a barrel to over $91 this year, higher oil prices “mean higher inflation and lower economic activity,” according to the economist.
Although inflation has fallen sharply from a four-year high, it remains well above the Fed’s 2% target, which could force the central bank to raise interest rates again. Roubini worries that further tightening by the Fed could trigger a mild recession.
“So I would say whether we will have a true soft landing, as opposed to a brief and shallow recession, remains an open question, even for the United States,” he concluded.
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