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Tags: Roubini | US | Growth | economy

Roubini: US Growth May Not Even Break 1% in Third Quarter

Tuesday, 17 July 2012 08:21 AM EDT

U.S. economic growth might not even break 1 percent in the third quarter of this year, which would put the country at stall speed and in danger of petering out, says New York University economist Nouriel Roubini.

The U.S. gross domestic product rate grew a lackluster 1.9 percent in the first quarter of this year, and will probably grow 1.2 percent in the second quarter before dipping below 1 percent in the third quarter, Roubini writes on his Twitter page, where he frequently posts economic commentary.

Retail sales were dismal in June, contacting 0.5 percent from May, when sales dipped 0.2 percent.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

Analysts were hoping for a slight increase in June.

June represented the third consecutive month in drop in retail sales, and the country hasn't seen a three-month decline since 2008.

"Q3 growth could be well below 1% given June sales report and unintended inventory build up. US at stall speed," Roubini writes in a Twitter posting, known as a tweet.

"US Q2 GDP growth looks like 1.2% at best. Q3 looks worse as fall in June sales & excessive inventories rise implies even weaker growth in Q3," writes Roubini, who called the housing collapse and downturn well before it happened.

"Retail sales fell in June even more than in May. Consumer confidence in a funk as job market falters. US headed to stall speed even be4 cliff," his Tweet reads.

Roubini was referring to an event dubbed "a fiscal cliff" due to strike on the first day of next year, when tax breaks are due to expire and automatic spending cuts kick in.

The combination of the expiring tax breaks and inbound spending cuts could siphon hundreds of billions of dollars out of the economy next year alone and possibly send the country back into recession.

Other economists agree, however, that the U.S. economy may be slowing well before the fiscal cliff approaches.

"Evidence is increasingly clear that the U.S. economy is slowing," says Jim Baird, an investment strategist at Plante Moran Financial Advisors in Kalamazoo, Michigan, according to Reuters.

Consumer spending drives roughly 70 percent of total U.S. economic output, and declining retail sales don't bode well for an economy already plagued with uncertainty stemming from the approaching fiscal cliff, the European debt crisis and a cooling Chinese economy.

"This is another example of how broader economic uncertainty is having an impact on economic activity," says Eric Fine, managing director of Van Eck G-175 strategies in New York, Reuters adds.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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Tuesday, 17 July 2012 08:21 AM
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