Features

Nouriel Roubini: recession is certain

Nouriel Roubini, described by Bloomberg as a “renowned doomsayer”, is concerned that we are heading for a global recession next year.

Nouriel Roubini © Stefan Wermuth/Bloomberg via Getty Images

Nouriel Roubini, described by Bloomberg as a "renowned doomsayer", is concerned that we are heading for a global recession next year. The New York University economics professor is perhaps best known for his warnings about the precarious state of the US housing market prior to the financial crisis of 2008.

Now he is worried that the trade war between the US and China, combined with a potential spike in oil prices (due to geopolitical tensions between the US and Iran), is set to derail the bull market. In short, "it's a scary time for the global economy", he tells Bloomberg TV. While there has been a temporary truce in the trade war, the underlying tensions between China and the US mean it's only a matter of time before the problem arises again. "This divorce is going to get ugly compared to the divorce between the US and the Soviet Union."

Central banks will, of course, react, which is one factor helping to prop up markets investors already expect the Federal Reserve to cut interest rates later this month. Yet as Roubini points out, during the 2008 crisis the Fed was cutting interest rates from a much higher level, and still couldn't prevent the recession. With key interest rates still at or near record lows around the world, and levels of debt very high, monetary policy alone cannot keep the party going. Throw in the risk of an oil-price shock, and we could end up with 1970s-style stagflation, with rising prices combined with slower growth.

Recommended

How long can the good times roll?
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
The charts that matter: the stimulus tug of war continues 
Global Economy

The charts that matter: the stimulus tug of war continues 

As the world's government throw money at their economies, John Stepek looks at how it's affecting the charts that matter most to the global economy.
24 Oct 2020
Buying bitcoin could be the best way to play the remote working boom
Bitcoin

Buying bitcoin could be the best way to play the remote working boom

The coronavirus pandemic has accelerated the move to home working, flexible employment practices and the rise of the “digital nomad”. One of the best …
21 Oct 2020
I wish I knew what negative interest rates were, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what negative interest rates were, but I’m too embarrassed to ask

There’s been a lot of talk from the Bank of England recently about introducing “negative interest rates”. So what on earth are they, and what would th…
20 Oct 2020

Most Popular

The Bank of England should create a "Bitpound" digital currency and take the world by storm
Bitcoin

The Bank of England should create a "Bitpound" digital currency and take the world by storm

The Bank of England could win the race to create a respectable digital currency if it moves quickly, says Matthew Lynn.
18 Oct 2020
Don’t miss this bus: take a bet on National Express
Trading

Don’t miss this bus: take a bet on National Express

Bus operator National Express is cheap, robust and ideally placed to ride the recovery. Matthew Partridge explains how traders can play it.
19 Oct 2020
Three stocks that can cope with Covid-19
Share tips

Three stocks that can cope with Covid-19

Professional investor Zehrid Osmani of the Martin Currie Global Portfolio Trust, picks three stocks that he thinks should be able to weather the coron…
12 Oct 2020