Even if the US and European economies manage to avoid a double dip, it will still feel like a recession, while more than half of the 800-plus US banks on the "critical list" are likely to go bust, according to renowned economist Nouriel Roubini of Roubini Global Economics.
The second half of the year will remain weak as tailwinds become headwinds, Roubini told CNBC on the shores of Lake Como, Italy at the Ambrosetti Forum economics conference.
"In the second half, fiscal policy becomes a headwind, no more cash for clunkers," Roubini said. "The positive scenario is that growth will be below par."
Roubini recently said the chance of a double-dip recession in the US was now more than 40 percent.
"The big risk is that there will be a downturn in markets that could impact the bond, the equity and the credit markets," he said.
“Job losses have been higher, the US jobs number will show that. There is no private sector jobs growth," he said. "Consumption is weak, exports are weak and housing is weak."
"If there is no final sales and no final demand, companies will not invest," he added.
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New Normal Coming and More Banks Will Fail
Roubini said he believes hopes of decoupling will be dashed as the slowdown in the US impacts China, Japan and the euro zone.
"In Europe, Germany is strong but the rest of the continent is pretty dismal," he said. "The rest of the world cannot cope without the prop of the US consumer. Chinese growth in the second half will be 7 percent."
“Get used to it," Roubini said. "Deleveraging has to continue as governments and consumers deleverage in the developed world."
"“The biggest banks have been backstopped, but 800-plus small- and medium-sized banks in the US remain on the critical list and half of those will go bust."
"We have to expect the new normal," he added. "We do not need a double dip for it to feel like recession."
“The biggest banks have been backstopped, but 800-plus small- and medium-sized banks in the US remain on the critical list and half of those will go bust," Roubini said.
Roubini said corporate and consumer debt problems will get worse and that there are more problems ahead in the commercial and residential property market.
"Policy makers are running out of bullets, the problem is we need fiscal consolidation, fiscal policy is constrained by the debt problem, monetary policy is becoming ineffectual," he said.
Roubini, known as Dr. Doom to most and voted as Roubini the Realist by CNBC.com readers, said further quantitative easing is pointless as interest rates are already low.
"We are in a liquidity trap and we have insolvency problems," he said.
“What we need is credible spending plans over the medium term on health care, welfare and retirement age," Roubini said. "This will create a fiscal constraint lasting well into next year."
"The best growth over the next 18 months will come from the domestically-focused Brazil, which will outgrow China for the first time in 20 years," he added.