Economist Nouriel Roubini has been a doomsayer for so long that he goes by the nickname “Dr. Doom,” but he sounded unusually optimistic amid the recent panic on Wall Street.
During a interview on Bloomberg TV On Wednesday, he dismissed investor fears that a recession was coming, joking that the stock and bond markets have predicted 10 of the last three recessions.
He added that markets have also seriously misjudged how many Fed rate cuts are coming over the past year, as traders have seen much more aggressive easing.
“The markets are often wrong about what’s going on with the economy and what the Fed is going to do,” Roubini said. “There is significant evidence of some slowdown in the economy, but I don’t think the data indicates we will have a hard landing anytime soon. There are at least some elements in force in the economy.”
Wait, what?
He rose to prominence when his warnings about the economy and the housing bubble were initially laughed off – only to be proven right when the Great Financial Crisis struck.
Since then, he has regularly identified numerous other catastrophes and warned of a stagflationary debt crisis at the end of 2022. He continued to sound the alarm into 2023, saying a “severe recession” was likely to occur amid a “Bermuda Triangle” of economic dangers and the “mother of all debt crises.”
It’s fair to say that the consensus on Wall Street last year was that the US would enter a recession following the Federal Reserve’s most aggressive series of rate hikes in four decades.
But in September last year, as the economy continued without going into a slump, he softened his tone and said a short or shallow recession was possible.
Then U.S. manufacturing and payroll data showed a steep decline earlier this month, sparking a massive sell-off in stocks across global markets and providing evidence that the few remaining bears on Wall Street may have been right.
Subsequent weekly unemployment benefits data came in lower than expected, calming nerves and helping the stock market recoup much of its losses.
Meanwhile, others on Wall Street have highlighted numbers that point to the economy’s underlying strength. Apollo chief economist Torsten Sløk said in a note on Saturday that the The Atlanta Fed’s GDP tracker points to third quarter growth of 2.9%.
“The bottom line is that there are still no signs of a US recession, and the US economy is doing fine with steady growth in daily and weekly data on restaurant bookings, air travel, hotel bookings, credit card data, bank loans, Broadway attendance, box office revenues and weekly bankruptcy filing data are declining,” he added.
