Economist Nouriel Roubini warns that the US economy is heading for a hard landing.
“Unfortunately, this time around, we have both demand factors and supply factors that are causing stagflation and high inflation,” Roubini said on a panel.
History suggests that whenever inflation in the US is above 5% and unemployment is below 5%, “any attempt by the Fed to essentially raise rates to fight inflation causes a hard landing rather than a soft landing,” he said.
Europe, the Euro-zone and the UK are even more fragile than the US, he said, adding that the European Central Bank is “in as much of a pickle as the Fed given the exposure to Russia, given the exposure to China.”
A series of negative factors including de-globalization, aging of populations, migration restrictions, weaponizing of the US dollar and climate change could lead to a depression, he said.
Earlier on Tuesday, Roubini forecast a US recession by the end of the year. “We’re getting very close,” as measures of consumer confidence, retail sales, manufacturing activity and housing are all slowing down sharply while inflation is high, he said on Bloomberg TV.
