Dr. Doom Nouriel Roubini thinks we are in a U, not the L-shaped near depression

[dkf]

he was worried about.

"I am not Dr Doom: I am Dr Realist": Interview with Newsweek and Washington Post
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Nouriel Roubini | Apr 27, 2009

Lally Weymouth of Newsweek and The Post sat down last week with economist Nouriel Roubini. Excerpts:

Q. You are the economist known for predicting the economic downturn in 2008. What do you believe is happening to the economy today?

A. The consensus among economists is that they see the economy that was contracting for the last two quarters at 6 percent going into positive economic growth by the second half of this year. . . . I believe that the rate of economic contraction is going to slow from negative 6 percent in the last two quarters to negative 2 percent by the fourth quarter.

Next year, I believe that the growth rate is going to be low -- 0.5 percent for the U.S., compared to the consensus view of 2 percent. I believe the unemployment rate this year is going to go well above 10 percent and will be well above 11 percent next year, so even if we are technically out of a recession, we are going to feel like we are in a recession.

I do agree that there is an improvement in the sense that the rate of contraction is not going to be as much as it has been in the last couple of quarters, but I still believe that the bottom of the economy toward the beginning or middle of next year. So my views are more bearish than the consensus.

I believe things are going to be very mediocre throughout the world; in particular, in Europe and in Japan. They will only get out of their recession toward the end of next year.

So you are still Dr. Doom?

No, I am not Dr. Doom. I am Dr. Realist. I don't believe we are going to end up in a near-depression. Six months ago I was more worried about an L-shaped near-depression. Today, after the very aggressive policy actions taken by the U.S. and other countries . . . we are, instead, in the middle of a U.

http://www.rgemonitor.com/blog/roubini

[Common Sense Party]

1. I feel the same way. I don't think this is The End. n/t

[nadinbrzezinski]

2. So Keynseian policies work...

cue the right wingers and the many round these parts who also said this was bull-crap

[bluestateguy]

3. Soooo.....I don't follow. Is a U better than an L?

All these letters?!

[Control-Z]

4. I think it means we will

be headed up the right side of the U in the not as distant future, rather than stay flat, and without recovery at the bottom of the L?

edit: for clarity

[nadinbrzezinski]

5. Yes, the U makes it look exactly like the letter

we are near the end (bottom) of it

The L stays flat at the end... see Depression

They are actually extremely descriptive

[Statistical]

6. Yes.

U and L refer to the shape of the graph of economic output.

U would be a substantial rapid drop and then short flat period (1 year) then rapid recovery.

L shape is rapid drop then a long (2, 5, 10 year) period of flat output.

The L shape recovery in Japan was a lost decade and routinely called the 'long death'.