+

Cookies on the Business Insider India website

Business Insider India has updated its Privacy and Cookie policy. We use cookies to ensure that we give you the better experience on our website. If you continue without changing your settings, we\'ll assume that you are happy to receive all cookies on the Business Insider India website. However, you can change your cookie setting at any time by clicking on our Cookie Policy at any time. You can also see our Privacy Policy.

Close
HomeQuizzoneWhatsappShare Flash Reads
 

'Dr. Doom' Nouriel Roubini says the US is bound for recession - thanks to high interest rates, sticky inflation and a credit crunch

Jun 15, 2023, 18:21 IST
Business Insider
Nouriel Roubini, an economics professor, speaks at a panel discussion at the SALT conference in Las Vegas May 14, 2014.Rick Wilking/Reuters
  • '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.
Advertisement

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.

Advertisement

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.

You are subscribed to notifications!
Looks like you've blocked notifications!
Next Article