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The Recession Will End… by 2010
Says who: None other than “Dr. Doom,” Nouriel Roubini, professor of economics at the Stern School of Business, New York University and chairman of RGE Monitor, an economic consulting firm.
“I have said on numerous occasions that the recession would last roughly 24 months. Therefore, we are 19 months into that recession. If, as I predicted, the recession is over by the end of the year, it will have lasted 24 months with a recovery only beginning in 2010. Simply put I am not forecasting economic growth before year’s end.” (via RGE)
Why it might be false: Not too long ago (a mere four months), Roubini was predicting an end not until December 2010 or so. And with his new call, he adds so many caveats that you almost think he’s hedging himself against getting it wrong. In line with his Dr. Doom image, he’s described the recovery as “very ugly” and “subpar,” and highlighted that, “It’s going to feel like a recession even when it ends.” While it’s a somewhat nice change to see him cautiously optimistic, he makes it hard to believe him. Outside of Roubini’s hard to believe optimism, we also can’t ignore the World Bank’s projection of a 2011 recovery given that it has a pulse on the global economy.
Why it could be true: Well, the banks are showing surer footing, and people seem to believe in it. The New York Times gave Goldman Sachs and JP Morgan each a big ole wet kiss on the front page of last Friday’s paper. Yesterday’s release of New York-based Conference Board’s index of leading economic indicators pointed to a higher than expected private-sector forecast of U.S. economic activity in June, with more plans for building homes, higher stock prices and fewer individuals filing first-time claims for jobless aid sent. And then there’s Dr. Doom himself. Though they say that being a pessimist means at some point you’ll be right, he was among the lone voices anticipating the recession’s beginning – can he be counted on to call its end? He might need to become Dr. McDreamy, since whatever happens, he’ll probably maintain his spot on the wave of economist star power.
Our call: We give credit where credit is due, and Roubini has built a track record of getting it right, calling the right predictions even when they weren’t welcome or high profile business and government leaders could hardly audibly say the R-word. It’s not easy to be the bearer of bad news. It actually takes a lot of chutzpa in your abilities (actually, it’s vital to surviving the recession). That said, given how he’s been ladling his forecasts with caveats versus straight explanations, it will be interesting to see how much and how long his chutzpa will last? Or, will he cave at some point?
Read an update on Roubini’s prediction here.
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Are we not in the longest recession since WWII?
The recession’s ending? Will end? Has ended? For whom?
And until it does – for all of us – how about taking a stab at personal deleveraging? Substitute a stack of cash for that credit card; betcha you’ll spend much, much less!
No economic growth before the end of the year? Is it time to rethink the spending/saving equation? Spending: Good for the economy.Saving: Good for sleeping at night. When it comes to You and Your Credit Card, is it A Love Affair Gone Bad?