U.S. may be entering another recession, Roubini says

U.S. may be entering another recession, Roubini says
Economist Nouriel Roubini said the U.S. economy could be entering another recession just as policymakers' options dwindle and the European debt crisis looms
JAN 11, 2012
Most advanced economies are lapsing back into recession while the U.S. is already in the throes of an economic contraction, according to Nouriel Roubini, co- founder and chairman of Roubini Global Economics LLC. “‘The way I see the global economy, I think we’re entering into a recession again in most advanced economies,” Roubini said in a panel discussion today at the Bloomberg Dealmakers Summit in New York. “I think we’re already into one in the U.S. based on the hard and soft data -- same with most of the euro zone, same with the United Kingdom.” The Conference Board today said that confidence among U.S. consumers stagnated in September near a two-year low as the share of households saying it was difficult to find a job climbed to the highest level in almost three decades. European leaders over the weekend faced pressure at the annual meetings of the International Monetary Fund to solve a debt crisis already spilling over into other parts of the world. “At this point, the issue is not whether there is going to be a recession or a double-dip but whether it’s going to be relatively mild or whether it’s going to be a severe recession and a global financial crisis,” Roubini said. “The answer to that question depends on what’s going to happen in the euro zone and whether they can get their act together.” “We are running out of policy bullets,” said Roubini, a professor at New York University’s Stern School of Business. The debt crisis in Europe could have consequences that are “worse” than the collapse of Lehman Brothers Holdings Inc. in 2008. Predicted Bubble Roubini predicted the bubble in U.S. housing prices before the market peaked in 2006. His forecasts haven’t all been accurate. When the Standard & Poor’s 500 Index fell to a 12-year low on March 9, 2009, he said it probably would drop to 600 or lower by the end of that year. Instead, the U.S. equity benchmark gained 65 percent for the rest of 2009. Speaking at the same panel, billionaire Wilbur Ross, chairman of private-equity firm WL Ross & Co., said that Ireland will likely be the first country to recover from the debt crisis. “The reason why I like Ireland is because unlike what I call the Club Med countries it doesn’t need reforming,” he said. “My leading indicator for Ireland is pub sales.” “Club Med” countries is a term occasionally used to refer to nations in southern Europe. European banks are “extremely dependent on the wholesale funding markets, in plain English, hot money,” Ross said. “That’s what makes them vulnerable.” --Bloomberg news--

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