A robust and self-sustaining U.S. recovery is not on the
cards, and we should now expect below trend growth for many years to come,
according to Nouriel Roubini, the economist famed for his bearish views. Roubini, best-known for calling the 2008
economic crisis, outlined five reasons the bulls have been wrong and argued
that an American economic cold will lead the rest of the world to catch
pneumonia in a post on the Project Syndicate website.
“Even this year, the consensus got it wrong, expecting a
recovery to annual GDP growth of better
than 3 percent,” the founder of Roubini Global Economics wrote. “And now, after
getting the first half of 2012 wrong, many are repeating the fairy tale that a
combination of lower oil prices, rising auto sales, recovering house prices,
and a resurgence of U.S. manufacturing will boost growth in the second half of
the year and fuel above-potential growth by 2013.”
Roubini believes the U.S. economy will slow further this
year and next as expectations of the “fiscal cliff” keep spending and growth
lower — and uncertainty about the outcome of the presidential election dogs
markets. The fiscal cliff could knock
4.5 percent off 2013 growth if all tax cuts and transfer payments were allowed
to expire and spending cuts where triggered, according to Roubini….
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