"I expect the worst recession in 50 years," Roubini told Bloomberg News. "There will be a cumulative fall of output of 4% from the peak, and unemployment will jump to 9%."
Further, predicting that future U.S. Federal Reserve interest cuts will be ineffective, Roubini also reiterated that the U.S. economy needs "a major, aggressive fiscal stimulus, a $300-400 billion package, because private demand is collapsing."
Roubini's forecasts were once considered to be 'too harsh' or 'implausible,' due to what many economists and analysts argued were premises that were incorrect or off-the-mark. These conclusions earned Roubini the nickname 'Dr. Doom.' However, in less than two years, and especially in 2008, U.S. financial and economic fundamentals have deteriorated to such an extent, that at least in some metrics, conditions are closer to Roubini's forecasts than those of the many, mainstream economists who had scoffed at his predictions.
Economist David H. Wang said that while he still doesn't expect a recession as deep as Roubini forecasts, had federal policy makers -- especially the Bush Administration and the U.S. Congress -- responded quicker with actions "along the lines of what Roubini was calling for, the economy would not be in as bad a shape as it is today."
Specifically, Wang said Roubini's clarion call / warning about the unsustainable nature of annual, double-digit housing price increases, and later, the need for massive fiscal stimulus, were two predictions "that proved to be 100% accurate."
For the record, Wang believes the U.S. economic recession started in Q1 of this year and "will likely end in Q3 2009, with negative GDP growth of 2.0-2.5% for that period." As noted above, Roubini expects a deeper recession.
Economic Analysis: The U.S. Federal Reserve's recent downgrade of U.S. economic performance through Q2 2009 (forwarded in its Federal Reserve Minutes) provides further evidence of a likely pronounced GDP slowing up ahead, further supporting Roubini's analysis.
Closing Bell: Dubai sends jitters throughout the market (S, BBY)
Heinz looking good after the second quarter?
Why isn't Bank of America updating its shareholders on CEO situation?
Reader Comments (Page 1 of 1)
11-24-2008 @ 2:35PM
debussy said...
The 20-something reporters writing many of these articles might want to rethink/update these catchy economists' nicknames -- they're taken. A simple background research would reveal that "Dr. Doom" actually was Henry Kaufman from Solly Bros. (And Dr. Gloom was reagan-era Martin Feldstein, later of Harvard.) Can't you be a little more original?? LOL
11-24-2008 @ 2:56PM
1smoothie said...
This should be called the "Nancy Pelosi democrat initiated recession" Thanx all you doofus devilcrats!
11-24-2008 @ 5:41PM
Karl said...
A moron could have told anyone this stuff but of course we need "experts" with fancy phony degrees etc. Economics is real simple but the real deciders here are the elite bankers like the 93 year old David Rockefeller the globalist oil banker who thought up all these fraud "free trade" agreements, NAFTA, WTO, heck these boys invented the damn CIA from the OSS which ran right out of their building in NYC. Outsourced all our real jobs to Communist China where they work for 32-64 cents an hour, distracts us as global soldiers to ensure the New World Order baloney and bankrupts the good old USA to break it down. Simple. Cheney was a director for David Rockefeller at CFR and Obama's chief foreign policy advisor co-founded the Trilateral Commision with David Rockefeller. One world government run by the bankers and technical elite. America is being downsized and the dollar will eventually be history along with the country. Trade technically, own some gold which trades opposite the dollar, and ignore the mass media baloney.(They own them too) Good luck, you're going to need it, they don't give a damn about people.