WARNING: MASSIVE RECESSION JUST AROUND THE CORNER
Scary insights from experts on the future of the US economy.... Will the glut in housing be enough to nudge us into recession?
Among those in that ghoulish chorus is global economist Nouriel Roubini, who, economically, comes across as a frightening combination of Count Dracula, Frankenstein's Monster and Godzilla all wrapped up into one. Guaranteed, he'll scare the daylights out of you if you ask him what he thinks about the economy, unemployment or the stock market.
The Turkish-born skipper of New York-based Roubini Global Economics, an international economic consulting firm, and a professor of economics at New York University tells me: "We're just a few months away, probably in November or December, before we move into a recession."
Here's his recession rationale:
• A bust in housing, which, he says, is no longer in a slump, but in a freefall.
• Roughly $70-a-barrel oil, which is inflationary and will appreciably curb consumer spending, especially consumer durables like furniture and home appliances.
• The catch-up of excessive credittightening by the Fed — 17 straight increases since June of 2004 — which should begin to meaningfully take its toll over the next 6 to 9 months.
• Falling real wages, adjusted for inflation.
• Negative savings and high debtservice ratios.
His economic outlook, Mr. Roubini observes, spells bad news for the job market, which he believes, will lose at least one million jobs next year. By mid-2007, he figures, the unemployment rate, now at 4.8%, will climb to as high as 6%. In the next few months, he expects job growth, which has been averaging a below-normal 110,000 new creations a month the past four months, to drop to zero.
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