For nearly two decades, esteemed economist Nouriel Roubini has worn the nickname “Dr. Doom” with honor. He earned it in the mid-2000s for warning of a housing crash that Wall Street dismissed, until he was proven catastrophically right.
TL;DR
- Nouriel Roubini, "Dr. Doom," is surprisingly optimistic about the U.S. economy, contradicting his usual bearish predictions.
- He argues that tariffs and policy uncertainty are less impactful than technological advancements driving U.S. growth.
- Roubini believes the U.S. stock market is not in a bubble and expects a rebound led by technology and capital spending.
- He suggests the U.S. can grow out of its debt and that the dollar will remain strong due to economic outperformance.
Since then, the NYU Stern School of Business professor emeritus has become one of the most recognizable bears in global finance, regularly sounding alarms about debt spirals, geopolitical shocks, pandemics, AI disruptions, and what he once called “the mother of all crises.”
So it’s perhaps surprising, even disorienting, that in the midst of investors teetering on the edge of a bear market, Roubini is breaking with his cohort—including fellow 2008-financial-crisis-prophet Michael Burry—to dismiss their pessimism about the U.S. Economy as misplaced.
In a new essay for the Financial Times, the economist argues that the conventional view—that America’s “Liberation Day” tariffs would trigger stagflation, tank the stock market, kneecap the dollar, and end U.S. Exceptionalism—is simply wrong. Instead, he sees something close to the opposite: a short period of cooling growth, followed by a powerful rebound led by technology and capital spending that keeps the U.S. Firmly in the top spot.
“The now common view that the U.S. Stock market is in a massive bubble and bound to crash is incorrect over the medium term,” he wrote. On the other hand, what he predicted isn’t necessarily the rosiest. The near-term picture looks like a “growth recession,’ he said, meaning slower, below-potential GDP. It’s not the hard landing or 1970s-style stagflation many have predicted, and it isn’t a bubble popping, but it’s a lopsided economy, as many Wall Street analysts have also noticed.
Tariffs won’t topple the recovery
Roubini, who previously cautioned about a “mega-threatened age”—a period characterized by AI, an aging populace, and worldwide unrest that jeopardized our economic well-being—now contends that the most severe apprehensions regarding tariffs and policy errors have not come to pass. He attributes this, in part, to the current administration's sensitivity to market responses. Following an immediate drop in asset values slumped subsequent to the tariff declaration, the administration engaged in “blinked,” policy adjustments and signaled a willingness for more standard trade discussions.
He anticipates that by the following year, expansion will pick up speed again. The Federal Reserve is currently in a phase of monetary relaxation, government financial incentives are still being distributed, and—most importantly—investment in AI-related areas keeps surge.
Roubini's viewpoints strongly resemble those of two leading Wall Street strategists: Torsten Slok from Apollo Global Management and Mike Wilson of Morgan Stanley. Slok, recognized for his “Daily Spark,” that skillfully merges perceptive graphics with conciseness, indicated argued on Nov. 20 that the economic landscape is “likely to reaccelerate in 2026.” Merely a few days prior, he had warned of inequality, stating: “It is a K-shaped economy for U.S. Consumers.” Furthermore, he's highlighted extreme concentration and valuations within the equity markets, where the Magnificent Seven is significantly outperforming the broader market.
Wilson, the lead equity strategist at Morgan Stanley, has for years anticipated a “rolling recession”, asserting that various economic segments contracted at distinct periods, creating an experience akin to a recession but spread unevenly. This perspective shifted in April 2022, when a “rolling recovery” commenced, and he has since maintained that an economic surge is on the horizon. Wilson has discussed the potential for a downturn in the stock market but, similar to Roubini, does not believe a collapse is near.
Tech > tariffs
Roubini's central point is based on a straightforward ranking: Tariffs and policy uncertainty are fleeting, whereas technological superiority leading to innovation that builds over many years is enduring.
“Tech trumps tariffs,” he writes.
He projects that the United States' capacity for expansion might reach 4% by the decade's conclusion, a doubling from its current 2% rate. This surge is anticipated to be driven by advancements in artificial intelligence and machine learning, robotics, quantum computation, the commercial space sector, and defense technologies. Although this aligns with numerous forecasts from Wall Street (Goldman Sachs anticipates actual growth potential hitting 2.3% during the early 2030s, for example), the projection of 4% significantly surpasses most other estimates.
However, Roubini contends that these sectors will persist in generating the “exceptionalism” which has distinguished the U.S. Over the last two decades, to a degree that economic growth will be propelled by productivity gains in the double digits.
He states that if potential expansion increases, equity returns ought to follow suit. During periods when growth averaged a mere 2% across the last twenty years, yearly returns still remained in the double digits. Accelerated growth signifies even more rapid earnings growth, and current valuations that appear high might prove to be well-founded instead of merely speculative.
For approximately twelve months, Roubini has adopted a more optimistic outlook—in August 2024, when widespread apprehension of an economic slump prevailed and frustration mounted over the Fed's reluctance to loosen policy, he calmed market fears again.
Debt—and the dollar—look less dangerous than feared
A persistent concern regarding AI-fueled expenditures revolves around the viability of debt. However, Roubini contends that this calculation would shift if economic expansion saw even a slight increase.
The Congressional Budget Office projects debt-to-GDP soaring under 1.6% real growth assumptions. But if growth averages 2.3% or higher, the ratio stabilizes. At 3% or more, it falls, meaning that we could potentially grow ourselves out of debt; an argument President Donald Trump has also used.
A technology-focused “supply shock” might also contribute to reducing inflation in the long run due to decreased production expenses and increased output, suggesting that elevated real interest rates might not lead to greater nominal returns. Furthermore, he contends that external debts appear controllable, as increased technology spending often draws in foreign capital, much like how “emerging-market” nations fund their expansion during periods of high commodity prices.
Roubini also rejects the frequently debated decline of the dollar, as he contends that the U.S. Economy will surge ahead while Europe experiences a downturn, leading to a stronger dollar in the long run.
Notably, “Dr. Doom” admitted that the U.S.’s top adversary, China, is at least on par with the U.S. In innovating in the “most important industries of the future,” such as AI and robotics. However, he doesn’t seem too concerned with the AI arms race.
“The U.S. Economy and markets are best positioned among advanced economies,” Roubini wrote. “They will continue to benefit from the U.S. Being the most innovative advanced country.”
