New York – The price of oil, which is rising too fast, and long-term interest rates that are beginning to creep up are likely to suppress a budding recovery, famous economist Nouriel Roubini, also dubbed “Dr. Doom,” told CNBC Monday.
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“I see even the risk of a double-dip, W-shaped recession… towards the end of next year,” Roubini told “Squawk Box Europe.”
“Oil could be closer to $100 a barrel towards the end of this year, this could be a negative shock to the economy,” he said, adding that other dangers come from long-term interest rates and big budget deficits.
In the next few months, unemployment may reach 11 percent in the US and around 10 percent in Europe.
Because of bad macroeconomic data and poor earnings prospects as companies have weak pricing power and demand is still subdued, the surprises will be on the downside, he said.
“That’s why I believe there’s going to be a significant market correction for equities, for commodities and even for credit,” Roubini added.
He said recovery signs should come from unemployment, housing, industrial production, sales and consumption data.
“When I look at them I see so far still more yellow weeds than green shoots. They have to bottom out, in my view they haven’t bottomed out. This recovery, unfortunately, because of the debt overhang… is going to be a very weak economic recovery, in my view,” he added.
The large budget deficits caused by government stimulus packages and bailouts make the work of central banks harder, as they now have to be cautious regarding inflation.
In Europe, the dangers came both from its weak economy and from exposure of Western European banks to Eastern European economies, he said. But protectionism is not an answer, Roubini warned.
“The reality is that too much protection would be dangerous,” he said.
“In Europe there is a risk that even the single market is breaking down because of protectionism, let alone the rest of the world,” Roubini added.
What a stupid move of goverment stimulus. I agree saving big banks but not the regular stimulus.
he has no clue what he is talking about
You people should fix up your economy . Its killing us in Canada. Even the Meshulachim are feeling it!
To all of you (post 3 and 4 especially) who feel you know more than Nouriel Roubini or feel you are in a position to criticize him, let me educate you for a moment.
Roubini is an Iranian born Jew who is a genius, has studied in Turkey, Italy, Israel and now resides in the US. He is an economics professor at NYU Stern School of Business and is the ONLY economist that predicted, at DAVOS in 05, what was going to happen to the economy and when it would happen. He did not give general terms BUT predicted it in DETAIL the housing market, fannie and freddie, the banks, the stock market and the whole global economy, all of it in detail.
Remember Davos is the global economic conference with the worlds ‘best’ economist’s attending. That is where he was nicknamed Dr Doom because the economy seemed great and now one was able to imagine what happened could actually happen, except him and he wasnt afraid to say it and be called crazy or laughed at, which he was BUT HE WAS ALSO RIGHT. Today he is one of the most reknowned and respected economist in the world.
If you were smart you would listen closely to what he has to say. He doesnt need to just shoot anything off the lip or to just toot his own horn, his reputation and track record proceed him .
#4 ,
Theres dozens of books on FDR’s new deal that clearly proved it prolonged the great depresion