While both Europe and the U.S. are striving to tackle big deficits while nurturing a delicate economic recovery, Arnab Das, managing director of market research and strategy at Roubini Global Economics, said its the euro zone that is facing the bigger hurdle.
"The bigger threat going forward is the euro zone performance," Das told CNBC. "Not only is there likely to be a cyclical slowdown or a stalling of the recovery in the euro zone, (but) we have this risk of some sort of dramatic structural break because of the sovereign debt crisis oscillating with the banking sector."
There are widespread concerns over the second half of the year for the U.S. economy, Das said, but numerous factors make it more capable of bouncing back than Europe.
- Watch the full interview with Arnab Das above.
The U.S. economy is "more responsive, more flexible than the euro zone," Das said. "There are less structural rigidities, plus you have a (Federal Reserve) that the market thinks is more on-side with the need to ease."
Europe faces the need to cut its budget deficit more sharply than the U.S., but also has a more "rigid" economy and deflationary risks, according to Das.
"Default rates are going to go up in all probability. I think by no means have we seen the end of the problem in the euro zone," he added.
As economies continue to slowdown, sovereign debt will become an increasing problem and efforts to cut it will be deflationary, he said.
Das warned on the outlook for stocks while the economic issues are being resolved.
"We went up too far, too quickly and too many things went up all at once with too high a correlation," he said. "Now we're going to have a bit of a shake out as the reality sets in of these balance-sheet issues."
- Get an alternative view on Europe's economic outlook here >>>