Tags: Roubini | Eurozone | Recession | US

Roubini: Eurozone in Recession, US at Risk for One

Wednesday, 07 Dec 2011 07:52 AM

The eurozone is stuck in a recession, the United Kingdom is about to follow suit and the United States risks falling into a fresh economic contraction due to exposure to the debt crisis across the Atlantic, says New York University economist Nouriel Roubini.

The United States is growing very slowly, and risks technically falling back into a recession led by a fiscal drag, such as when government tax issues offset growth rates.

Payroll tax cuts and unemployment insurance benefits, for example, are due to expire in a few weeks and should Congress fail to renew them, higher payroll taxes cutting into worker paychecks and less unemployment benefits helping out those out of work will crimp economic activity.
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Further threats to the U.S. economy include a still weak housing sector and exposure to volatile oil prices.

"EZ in recession; UK headed to recession; US at recession risk given weak growth, fiscal drag, EZ shocks, housing, oil; China slowing sharply," Roubini said in one of his many tweets on the Twitter social networking site.

roubinigetty200.jpg
Nouriel Roubini
(Getty Images photo)
China has taken steps to cool its once red-hot economy although Beijing recently cut reserve requirements on banks to resume more growth-oriented economic policies.

Some economists say the United States could avoid dipping back into a recession even if Europe falls into one thanks to increased consumer spending as well as stability in the labor market.

Hopes that European leadership can firewall the crisis at an upcoming Brussels summit will buffer the U.S. economy as well.

"A mild (European) recession is probably already baked in and most of the peripheral nations are already in recession," says Peter Cardillo, chief market economist at Rockwell Global Capital in New York, according to CNBC.

"The fact that we could get some sort of a coordinated plan by the EU at the coming summit helps cushion a severe recession in Europe. That means that we continue to grow at a modest pace."

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The eurozone is stuck in a recession, the United Kingdom is about to follow suit and the United States risks falling into a fresh economic contraction due to exposure to the debt crisis across the Atlantic, says New York University economist Nouriel Roubini. The United...
Roubini,Eurozone,Recession,US
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2011-52-07
Wednesday, 07 Dec 2011 07:52 AM
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