Roubini warns of stagflation

Nouriel Roubini, chairman of research firm RGE Global Monitor of New York, said today that a 1970s-style stagflation could reappear. The economy will recover by yearend, though growth will be anemic and subject to higher interest rates and commodity prices, he said today at an investment conference hosted by Reuters. Mr. Roubini said industrial production data is down sharply and receded another 1.1 percent in May, according to a report from the news service. Despite talk of “green shoots” in the economy, "to me it's more like yellow weeds," he said, referring to continued weakness in industrial production, according to Reuters. Mr. Roubini said slow growth would allow the Federal Reserve to keep interest rates low, but eventually the Fed will have to mop up the expanded money supply to prevent an upsurge in inflation, Reuters reported. Unemployment, which is at 9.4% will rise to 11%, and then begin to drop, he predicted.