When it comes to economic prognostication, few are as well-known as Nouriel Roubini, otherwise known as “Dr. Doom.” Roubini has gained notoriety for his consistently pessimistic views on the world economy, and he is now convinced that the world is headed for a period of stagflation.
In a recent interview with Bloomberg, Roubini cited a number of factors that he believes will contribute to this stagflationary environment. These include a stock market sell-off, tensions in the private equity market, a slowdown in the US housing market, and a plunge in the credit market as companies take on more debt. Roubini also points to the Fed’s decision to keep interest rates low as a major contributing factor.
But even a deep recession, Roubini believes, will not be enough to contain inflation, thanks to the lingering impact of adverse supply shocks. As a result, he predicts a period that combines the worst of the 1970s and the global financial crisis.
Part of what will make this chapter so painful, Roubini believes, is the high levels of debt in the developed world, both government and corporate. Additionally, he predicts the collapse of established politics, as a grim economic environment gives rise to populist politics on both the left and the right.
Roubini’s predictions are certainly grim, and it remains to be seen whether or not they will come to fruition. However, given his track record, it is worth paying attention to what he has to say.
About Nouriel Roubine
Nouriel Roubini is an economist who is known for his work on international finance and macroeconomics. He is currently a professor at the Stern School of Business at New York University. Roubini was born in Turkey and raised in Italy. He received his BA in economics from the University of Bologna and his PhD in economics from Harvard University. Roubini has served as an economic advisor to a number of governments and international organizations. He is a member of the Council on Foreign Relations and the Bretton Woods Committee. Roubini is a regular contributor to a number of publications, including The New York Times, The Financial Times, and Project Syndicate.