Don't plan on celebrating anytime soon, says NYU economist Nouriel Roubini, who foresees only 1 percent growth in the economy over the next few years.
"The recovery is going to be slow,” Roubini told CNBC, adding that if jobseekers too discouraged to continue seeking work and unemployed part time workers are included in calculations, the unemployment rate is already at 16.5 percent.
“It’s going to be ugly. It's going to feel like a recession even when it ends."
The financial system freefall has ended, Roubini says, but the economy is still vulnerable sluggish U-shaped recovery that might go into a W double dip if fiscal problems continue.
He expects a second stimulus package will be needed by the end of the year.
Roubini believes there’s a very delicate tradeoff going on now.
“There’s this question of exit strategy from the market and fiscal easing,” he says.
“If you do it too much too soon, raising taxes and cutting spending, you end up in a recession because the economy is still very weak.”
On the other hand, increasing already large budget deficits by adding expenditures such as universal health care will push interest rates higher and lead to inflation.
Republicans are calling the Obama administration’s $787 billion stimulus a failure.
“The reality is it hasn’t helped yet,” Sen. Jon Kyl (R-Ariz.) told the Boston Globe.
“What I proposed is, after you complete the contracts that are already committed, the things that are in the pipeline, stop it.”
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