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Economic Recovery Still Months Away: Roubini, Rogoff

CNBC.com
Friday, 15 May 2009 | 6:34 PM ET
Nouriel Roubini
CNBC.com
Nouriel Roubini

The U.S. economy isn't likely to recover for months, and even then will remain weak for a long time, two well-known economists told CNBC.

Nouriel Roubini, co-founder and chairman at RGE Monitor, also known as Dr. Doom, and Kenneth Rogoff, professor at Harvard University's Department of Economics, both said the economy still faces serious challenges.

"People talk about a bottom of the recession in June, but I see it more like six to nine months from now," Roubini said. "The green shoots everyone talks about are more like yellow weeds to me."

Roadmap to Recovery
Fed presidents of Dallas and Minneapolis say a deep recession has been avoided but they caution a recovery will be very slow, with Nouriel Roubini, RGEMonitor.com and Ken Rogoff, Harvard University.

"I think there will be a bounce in the second half of the year from the massive stimulus package," Rogoff said. "But I think the longer run trend is very slow, so we're vulnerable to dipping down again sometime in the next couple of years, like Japan."

Roubini said that the financial crisis was more than a crisis of confidence. "It was a crisis of excessive leverage of housing and the corporate sector," said Roubini. "We're not reducing the leverage, we're pushing the losses from the private sector on the government and increasing public debt. That's going to be a drag for growth."

"Housing's going to take five years to recover, and we have a long way to go," Rogoff said.

(Click on the video to watch the full Roubini / Rogoff interview)

"The broader risks from the downturn are to the dollar and interest rates," Rogoff added. "There's more and more debt and if interest rates go up, we're going to feel it. It's hard to see how we'll have booming growth for the next five years."

"I see slow growth for the next couple of years," Roubini said, "even if there is a recovery. Large budget deficits will push out growth."

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