Nouriel Roubini is an economist who predicted the 2008 financial crisis. As a result, he was called by the public “Dr Doom”. Roubini predicts that there will be a long and ugly recession in the US globally which could last throughout 2023.
According to Roubini, the recession is so serious that even a mild recession will cause S&P 500 to fall by 30%. Roubini emphasized that a real hard landing may happen where S&P 500 will fall by 40%.
Roubini recognized that many people think that there will only be a mild and shallow US recession. Roubini asked these people to look at the large debt ratios of US corporations and governments.
“Dr Doom” Nouriel Roubini: S&P 500 will fall by 40%
When the debt ratios are high, corporations and governments will be adversely affected by the hike in interest rates. These corporations will have to bear higher debt servicing costs.
Roubini further stated that Federal Reserve could not reduce inflation without causing a huge blow to the US economy. The present inflation forces Federal Reserve to keep increasing its interest rate, and this will result in a recession.
In the meantime, the US government is in too much debt. As a result, it cannot provide fiscal stimulus remedies to the public because it will overheat the aggregate demand.
