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Economist Nouriel Roubini calls predictions for shallow recession ‘delusional’

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Economist Nouriel Roubini, who accurately predicted the 2008 financial crisis, believes the US is heading towards a deep recession and said those claiming the downturn can be mild are “delusional.”

“There are lots of explanation why we’re going to have a severe recession and a severe debt and financial crisis,” Roubini said on Bloomberg TV Monday. “The concept that is going to be short and shallow is completely delusional.” 

As an alternative, he’s forecast a deep, impactful recession consequently of rising rates of interest and high debt ratios within the wake of the COVID-19 pandemic.

Unlike the Seventies recession when the debt ratio was low despite “stagflation” — a mix of stagnant growth and high inflation — the national debt has skyrocketed since 2008 and was subsequently followed by a period of low inflation on account of a credit crunch and sudden demand shock, he said.

Economist Nouriel Roubini predicts a deep recession consequently of rising rates of interest and high debt ratios.AFP via Getty Images

“This time, now we have stagflationary negative aggregate supply shocks and debt ratios which are historically high,” said Roubini. “In previous recessions, just like the last two, we had massive monetary and financial easing. This time around we’re going right into a recession by tightening monetary policy. We have now no fiscal space.”

Roubini is the CEO of Roubini Macro Associates and has earned the nickname Dr. Doom for his bleak predictions.

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