If the incoming administration's fiscal policies are appropriate, the U.S. economy could begin to grow again in 2010, says NYU economist Nouriel Roubini.
"The only risk is that the recovery of growth could be so weak that it feels like a recession even though we are technically out of it," Roubini told U.S. News.
"I think there is a two-thirds probability that we will end up in a severe, two-year-long recession. And that would be by any standard the worst recession that the U.S. has experienced in the last 60 years."
Inappropriate economic policies would lead to a Japanese-style stagnation, Roubini says.
“At this point the U-shaped recession could turn into an L-shaped recession if we don't fix the financial system, and the credit crisis becomes worse and if we don't get a massive fiscal stimulus,” he notes.
Vice President-elect Joe Biden recently defended plans for the incoming Obama administration’s expanded economic recovery plan against charges that it would inflate the national deficit.
Biden cited “keeping the economy from absolutely tanking” as the No. 1 goal.
During the presidential campaign, both Obama and Biden spoke of a stimulus plan in the $150 billion to $200 billion range.
"There's going to be real significant investment, whether it's $600 billion, or more, or $700 billion,” Biden now says.
“The clear notion is, it's a number no one thought about a year ago."
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