Tags: Roubini | economic | slowdown | US

Roubini: Global Economic Slowdown May Spill Into US

By    |   Monday, 20 October 2014 07:50 PM

While star economist Nouriel Roubini of New York University expects U.S. economic growth to total about 3 percent annualized in the second half of this year and into 2015, he sees several risks to that scenario.

On the external side, "the global economy looks like it’s running on a single engine, the one of the U.S. The other three major ones are sort of stalling," he tells FINalternatives news service.

"The eurozone is at risk of deflation and triple-dip recession. Japan has been hurt by fiscal contraction following the consumption tax, and China is quite sharply slowing down." All that weakness can hurt the United States, Roubini warns.

An acceleration of the dollar's rise — the U.S currency hit a six-year peak against the yen and a two-year high against the dollar last month — also could damage the U.S. economy, he says. A stronger dollar depresses exports by making them more expensive in foreign currency terms.

On the domestic side, it's not clear the economy can withstand higher interest rates from the Federal Reserve, Roubini says.

Doug Kass, president of hedge fund manager Seabreeze Partners Management, thinks the economy is too weak to allow Fed rate hikes before 2016.

"I think we’re approaching an ‘aha’ moment, when investors realize that growth isn’t going to emerge in the months ahead," he told The New York Times.

"People are losing sight of the fact that the Fed hasn’t raised rates since June 2006," he said. "I don’t see them raising rates for two or three more years."

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While star economist Nouriel Roubini of NewYork University expects U.S. economic growth to total about 3 percent annualized in the second half of this year and into 2015, he sees several risks to that scenario.
Roubini, economic, slowdown, US
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2014-50-20
Monday, 20 October 2014 07:50 PM
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