Economist Nouriel Roubini has been such a doomsayer for so long that he’s earned the moniker “Dr. Doom,” but he sounded uncharacteristically bullish amid Wall Street’s recent panic.
During an interview on Bloomberg TV on Wednesday, he dismissed investors’ fears that a downturn is coming and quipped that the stock and bond markets have predicted 10 out of the last three recessions.
He added that markets have also badly misjudged over the last year how many Fed rate cuts are on the way, as traders have seen much more aggressive easing.
“The markets are often wrong about what’s going on with the economy and what the Fed is going to be doing,” Roubini said. “There is some significant evidence of some slowdown of the economy, but I don’t think the data suggest that we’re going to have a hard landing anytime soon. If anything, actually, there’s some elements of strength in the economy.”
Wait, what?
He rose to prominence when his warnings about the economy and the housing bubble were initially laughed off—only to be proven right when the Great Financial Crisis hit.
Since then, he has regularly flagged numerous other catastrophes, and in late 2022 warned of a stagflationary debt crisis. He kept ringing the alarm into 2023, saying a “severe recession” was likely amid a “Bermuda Triangle” of economic dangers and the “mother of all debt crises.”
To be sure, the consensus on Wall Street last year was that the U.S. Would tip into a recession after the Federal Reserve’s most aggressive string of rate hikes in four decades.
But by last September, as the economy continued to chug along without hitting the skids, he softened his tone, saying a short or shallow recession was possible.
Then U.S. Manufacturing and payroll data earlier this month showed precipitous deterioration, triggering a massive stock selloff in global markets and providing evidence that the few remaining bears on Wall Street may be right.
Subsequent weekly jobless claims data came in lower than expected, calming nerves and helping the stock market recoup much of its losses.
Meanwhile, others on Wall Street have highlighted data that indicates underlying strength in the economy. Apollo chief economist Torsten Sløk said in a note on Saturday that the Atlanta Fed’s GDP tracker points to third-quarter growth of 2.9%.
“The bottom line is that there are still no signs of a US recession, and the US economy is doing just fine with steady growth in daily and weekly data for restaurant bookings, air travel, hotel bookings, credit card data, bank lending, Broadway show attendance, box office grosses, and weekly data for bankruptcy filings trending lower,” he added.