An Interview With Economist Nouriel Roubini
Lally Weymouth of Newsweek and The Post sat down last week with economist Nouriel Roubini. Excerpts:
Q. You are the economist known for predicting the economic downturn in 2008. What do you believe is happening to the economy today?
A. The consensus among economists is that they see the economy that was contracting for the last two quarters at 6 percent going into positive economic growth by the second half of this year. . . . I believe that the rate of economic contraction is going to slow from negative 6 percent in the last two quarters to negative 2 percent by the fourth quarter.
Next year, I believe that the growth rate is going to be low -- 0.5 percent for the U.S., compared to the consensus view of [plus] 2 percent. I believe the unemployment rate this year is going to go well above 10 percent and will be well above 11 percent next year, so even if we are technically out of a recession, we are going to feel like we are in a recession.
I do agree that there is an improvement in the sense that the rate of contraction is not going to be as much as it has been in the last couple of quarters, but I still believe that the bottom of the economy [will be seen] toward the beginning or middle of next year. So my views are more bearish than the consensus.
I believe things are going to be very mediocre throughout the world; in particular, in Europe and in Japan. They will only get out of their recession toward the end of next year.
So you are still Dr. Doom?
No, I am not Dr. Doom. I am Dr. Realist. I don't believe we are going to end up in a near-depression. Six months ago I was more worried about an L-shaped near-depression. Today, after the very aggressive policy actions taken by the U.S. and other countries . . . we are, instead, in the middle of a U.
You think the Obama administration is on the right track with the stimulus packages and Chairman of the Federal Reserve Ben Bernacke pumping money into the system?
Yes, I have to give credit to the administration. Within 30 days of coming to power, they did an $800 billion stimulus package, a new program to deal with mortgages and foreclosures, and also a bank plan that, when Treasury Secretary Tim Geithner came with details, made the markets rally sharply.