'Dr. Doom' Nouriel Roubini says the US is bound for recession - thanks to high interest rates, sticky inflation and a credit crunch
- 'Dr. Doom' Nouriel Roubini can't stop ringing the alarm about an imminent US recession.
- The NYU professor said chances of a hard landing are higher as a combo of factors punishes the US.
Economist Nouriel Roubini, also known as 'Dr. Doom', doubled down on dire warnings about the US, saying the nation is headed for a recession as a combo of higher interest rates, sticky inflation, and a credit squeeze barrel the economy.
"I would say the probability of a hard landing – meaning at least two consecutive quarters of negative economic growth – are higher than the one of a pure soft landing, the NYU professor said in a Yahoo Finance interview on Wednesday.
"The economy is slowing down, the Fed has raised rates, and in my view, they'll have to raise them more because inflation is still too high. Both wage inflation and core," Roubini said.
The Federal Reserve paused its interest rate hiking cycle for the month of June, saying it's taking a break after seeing the effects of tighter borrowing costs on the most sensitive areas of the economy, including the housing market.
The move comes a day after the US economy reported inflation numbers for May, showing consumer price pressures continued to cool down with the Consumer Price Index rising by 4.0% annually.
But even with the slowdown in inflation, economists like Roubini are not all optimistic. That's due to concerns about sticky inflation – a market condition where prices remain resistant to change. According to Roubini, that means the Fed is likely to raise rates in July and September.
He also stressed that credit growth has taken a hit given turmoil in the banking sector has squeezed lending among regional banks, and an economic slowdown in China doesn't bode well for the US economy too.
"Certainly there is going to be a recession. Whether that recession is going to be short and shallow as opposed to more severe depends on many factors," Roubini said.