Nouriel Roubini cautioned the world faces severe risks that aren’t being handled carefully. He warned people should “live on high-alert” as inflation, climate change and the risk of military conflict threaten the world. Roubini also slammed the Fed for missing the mark on inflation, predicting a “deep and protracted” recession. Loading Something is loading.
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Top economist Nouriel Roubini has painted a gloomy picture on what 2023 has in store for the global economy.
In an interview with the Financial Times, Roubini, often dubbed “Dr Doom” for his pessimistic predictions, said a convergence of old and new problems pose risks to the world.
“I think that really the world is on a slow-motion train wreck. There are major new threats that did not exist before, and they’re building up and we’re doing very little about it,” he said.
He warned that a mix of inflation, artificial intelligence, climate change and the risk of a World War III all stand to have enormous global impact. “We must learn to live on high alert,” he said, adding “We will need luck, global co-operation and almost unprecedented economic growth” for a positive outcome.
Expanding on his downbeat predictions for next year, Roubini slammed the Federal Reserve for missing the mark on inflation, warning there’s a sure chance the economy will tip into a recession as a result of the US central bank’s aggressive interest-rate increases.
Just last week, the Fed raised rates by 50-basis points as it continues its battle to bring down inflation from near 40-year highs toward its 2% target. The central bank has boosted borrowing costs by more than 400 basis points since March, fueling sharp financial-market declines across asset classes.
“The conventional wisdom, coming from policymakers or Wall Street, has been systematically wrong. First, they said inflation’s going to be transitory . . . Then there was a debate over whether rising inflation was due to bad policies or bad luck,” Roubini said.
He warned that the oncoming economic downturn will be severe. “No, this is not going to be a short and shallow recession, it’s going to be deep and protracted,” he said.
With US inflation at 7.1% and unemployment at 3.7%, Roubini also cautioned the world’s largest economy will almost certainly face a hard landing.
Earlier this month, Roubini sounded the alarm on potential stock market losses given the likelihood of a US recession. He predicted the S&P 500 could crash as much as 25% if the US economy contracts next year.