Economist Nouriel Roubini describes forecasts of a shallow recession as ‘fake’

Economist Nouriel Roubini, who correctly predicted the 2008 financial crisis, believes the US is headed into a deep recession and said those who claim the deflation will be mild are an “illusion”.

“There are many reasons why we are experiencing severe recession, severe debt and a financial crisis,” said Roubini He said on Bloomberg TV Monday. “The idea that this would be short and superficial is completely delusional.”

Instead, it forecasts a deep and impactful recession as a result of higher interest rates and higher debt ratios in the wake of the COVID-19 pandemic.

Unlike the stagnation of the 1970s when the debt ratio was low despite “stagflation” — a combination of stagnant growth and high inflation — the national debt has risen dramatically since 2008 and this has been followed by a period of low inflation due to the credit crunch and sudden demand shock, he said.

“This time, we have negative aggregate supply shocks accompanied by stagflation and historically high debt ratios,” said Roubini. “In previous recessions, like the last two, we had massive monetary and fiscal easing. This time we are entering a recession by tightening monetary policy. We don’t have fiscal space.”

Roubini is the CEO of Roubini Macro Associates and has been awarded the title of Dr. Dom for his grim outlook.