This page has been archived and commenting is disabled.
Party Boy Roubini Worries About Double Dip
From The Daily Capitalist
My favorite party boy economist, Nouriel Roubini, just came out with his analysis for the second half and he notes that we may be heading toward a double-dip recession. Too much negative news, he frets. I have been saying this for some time. The difference between me and Roubini is that he believes in the necessity and efficacy of fiscal and monetary stimulus whereas I don't. He went to Mises University but, apparently, only took Austrian Econ 101, not 201.
Here is his research note:
V, U and W
A slew of poor economic data over the past two weeks suggests that the U.S. economy is headed for a U-shaped recovery—at best—in 2010. The macro news, including data on consumer confidence, home sales, construction and employment, actually suggests a significant downside risk even to the anemic levels of growth which RGE forecast for H1. The U.S. faces continued challenges in H2—particularly as historic levels of fiscal stimulus fade—and appears far too close to the tipping point of a double-dip recession.
This is not the conventional wisdom. Heated debate continues to rage in the United States on whether the economic recovery will be V-shaped (with a rapid return to robust growth above potential), U-shaped (slow anemic, sub-par, below trend growth for at least the next two years) or W-shaped (a double-dip recession). The V camp includes distinguished research groups and individuals such as Ed Hyman’s ISI, Larry Meyer’s Macroeconomic Advisors, the research group of JP Morgan, Michael Mussa and others. The U camp includes—among others—Roubini Global Economics, Goldman Sachs’ U.S. economic research group, PIMCO and Ken Rogoff. As early as August 2009, I worried in a Financial Times op-ed about the risk of a double-dip recession even if our RGE benchmark scenario characterizes the risk of a W as still a low probability event (20% probability) as opposed to a 60% probability for a U-shaped recovery. Others concerned about the double-dip risk include also David Rosenberg, Gary Shilling and John Makin.
Ed Hyman and I debated whether the recovery would be U or V-shaped on a February 22 conference call attended by over 2,200 listeners. Since that call, a slew of new U.S. macro data have come out. They have been almost uniformly poor, if not outright awful. Consumer confidence, based on the Michigan survey, has tanked. On the real estate front, new home sales are collapsing again, existing home sales are also falling sharply, and construction activity (both residential and commercial) is sharply down. Durable goods orders are down, initial claims for unemployment benefits remain stubbornly high (way above the 400K mark). Real disposable income for Q4 has been revised downward while real disposable income (before transfers) for January was negative again. The manufacturing ISM index—while still expanding being above 50—has now fallen a couple of notches and its production and new orders index levels are falling, too; and global PMIs suggest a loss of momentum in the global economic recovery. Real inventories look unchanged in Q1 relative to Q4; auto sales were at best mediocre; core CPI was falling and core PCE was close to 0%, suggesting anemic demand and economic weakness. Q4 GDP growth was revised upward to 5.9% but most of it (3.9%) was due to inventories; final sales grew at a 1.9% rate while consumption grew at a dismal 1.7% (down from 2.8% in Q3). Q3 growth has been revised from an initial 3.5% to 2.8% to 2.2%, with final sales growing only 1.7%. So, at the time of maximum policy stimulus (H2 of 2009), final sales were growing only at a pathetic 1.8% average rate.
The eurozone (EZ) debt crisis, which RGE discusses in depth in a major new paper, predisposes Europe to a rising double-dip risk, due to the wave of fiscal austerity sweeping the periphery of the EZ. Even if the EZ doesn’t enter a double dip, the growth of domestic demand there will be as or more constrained than in the United States. This, in turn, will be a drag on the potential for U.S. export growth. The U.S. dollar rally on risk aversion reflects this risk. The U.S. dollar is settling back down and the threat of a debt crisis is headed off by a stronger Greek fiscal adjustment and potential adjustment package. But fiscal spending cuts, confidence hits and the looming threat of either rising unemployment or falling wages in the public sector—on top of private sector retrenchment—will remain. A similar retrenchment may well lie ahead in the United Kingdom, given rising fiscal sustainability concerns and the threat of a sterling crisis. Europe then will have great difficulty being a source of demand for U.S. exports, and may even provide impetus to faltering global demand growth, contributing to the threat of a wider double dip across high-income countries.
»
- advertisements -
Roubini RGE has Larry Summers on his payroll.
Roubini is a change agent.
Oh, Come nowww---Why are you rippin' on Roubini??
I have personally seen it--Women flock to that man like white on rice--
Don't be a hater Tyler-- Be happy for the man!! :))
Me thinks NouRoub has his hands full on many fronts if this photo is any indication. Cough.
RH
Deflationary depression, it is coming. Austerity measures in Greece, Portugal, UK, Spain, reduced spending in China, consumers tapped out on debt in the US, it is coming.
Was this Roubini piece from 2009 or 2010?
I think he just copied last year's piece.
-BBH
dailyjobcuts.com reciprocates his thoughts !!
lol what a beatiful time we are living.. clowns are kings..
...and in other news, Ray Charles was blind.
History is laughing at us folks.
You mean like Humpty Dumpty kind of laughing?
Or Jack and Jill funny?
We are still in the eye of the storm. It's a really big storm.
Since Roubini and Larry (Destroyer of Worlds) Summers are best buddies and former partners... my guess is that Roubini is doing some 'expectations management' work for the administration here and attempting to recover his lost credibility to keep the 'double dips' at his beck and call.
This is not a recovery people... it's a reset to a much lower level of consumption at best.
'L' bitchez!
+1. Once TPTB have all the arrangements made for the second dip, it will begin....and it will be okay to short, because they say so, and will be enjoying shorts themselves. With Mary/SEC deploying the 10% drop-and-stop rule, they're goal is an organized, controlled drop.
Then all will be well with the world, and we'll all get to see Wall Street's name changed to Bernanke-Blankfein Boulevard. Oh, and yes, the Geithner Galleria will be the new financial emporium.
+1
I still can't see much difference from japan, except the speed.
He prefers a V-shape all right, but I bet that won't be the shape of the "recovery".
ummm, i know that no one actually cares about the peasantry or what is actually happening in the country...ya know, on the ground? but....i've just finished a five day road trip -- New Orleans to Jacksonville.....and, uh, there sure ain't no recovery you can see with the naked human eye.....
nope. lots of empty mall space, no development without massive FOR SALE signs, and PRICES SLASHED logo work....
and, the only store I saw ....in hundreds of miles of traveling....with lines and full parking lots was walmart.
recovery.....a delusion of the first order given what i saw. Nobbi is right on.
Coeds? Those chicks are like 40. LOL.
Those women are in their prime - lucky Keynesian bastard, I bet he gave them a Fiscal stimulus
With members of the plunge protection team in pocket...hopefully
+10 Giddeup!
Before or after quantitative easing?
Sigh...I'm getting old...
It's okay. I like the cougars, myself.
R-RAWR!!! (cougar noise)
LOL
Got any Spam.
I'll say he's double dipping into some coeds that foxy bastard!