'Broader Picture' Shows Jobless Up, Economy Down: Roubini
CNBC.com Senior Writer
LAS VEGAS – The US faces another year of rising unemployment and subpar growth as hopes for a recovery give way to a global slowdown, according to economist Nouriel Roubini.
The jobless rate, which recently grew to 9 percent, is likely headed for 9.8 percent in a year while economic growth will be less than 2 percent, he said.
Such pessimism, which is outside the consensus, comes not only from domestic problems but also mounting woes around the world, particularly in the euro zone and its mounting debt issues.
“I’m not a pessimist, I’m a realist,” Roubini, head of Roubini Global Economics and a professor at New York University’s Stem School of Business, said during a lively panel debate at the Skybridge Alternative Investment (SALT) conference.
Though the line drew a chuckle from the 1,600 or so investment professionals in the audience, his fellow panel members were more disagreeable toward Roubini’s forecast.
That’s nothing new, especially considering that Roubini was one of the few economists to foresee the collapse of the financial system.
Since then, he’s been warning repeatedly of global economic woes, sometimes correctly sometimes not. But his opinions are always closely watched around Wall Street and beyond.
In his remarks today, he noted that the first quarter was “a bit of a disaster” for US economic growth, with the 1.8 percent increase in gross domestic product well below initial forecasts well north of 3 percent.
That’s just a precursor, he said, as manufacturing indexes show weakness, commodity prices trend higher—despite their recent pullback—and the world copes with the likelihood of sovereign debt defaults.
“Things are going to be much more difficult than they’ve been so far,” he said.
While not predicting a double-dip—essentially a return to outright recession—he sees the problems in Europe, where Greece and probably several other nations are headed for debt restructurings, as another headwind to a US recovery.
“The periphery of the European Union is basically a disaster,” Roubini said. “We’re looking at the US when we should be looking at the broader picture.”
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