Dr. Doom’s still gloomy about the U.S. economy
The recent signs of an economic turnaround haven’t made Nouriel Roubini too hopeful. He points to the ongoing Euromess, a slowdown in China and rising tensions in the Middle East, but also believes that domestic problems will hold back the United States:
[W]hile U.S. data have been surprisingly encouraging, America’s growth momentum appears to be peaking. Fiscal tightening will escalate in 2012 and 2013, contributing to a slowdown, as will the expiration of tax benefits that boosted capital spending in 2011. Moreover, given continuing malaise in credit and housing markets, private consumption will remain subdued; indeed, two percentage points of the 2.8% expansion in the last quarter of 2011 reflected rising inventories rather than final sales. And, as for external demand, the generally strong dollar, together with the global and eurozone slowdown, will weaken U.S. exports, while still-elevated oil prices will increase the energy import bill, further impeding growth.
FT’s Edward Luce agrees the US recovery will be “cold and grey.” I point to another factor holding us back. Floyd Norris is more optimistic.
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