An article yesterday titled ‘Roubini warns of double-dip recession: report’ says Nouriel Roubini “sees a “big risk” of a double-dip recession” and “said it appears the global economy will bottom out in the second half of this year, and that U.S. and western European economies will likely experience “anemic” and “below trend” growth for at least a couple of years” after a quarter or two of rapid growth related to recovery in inventories and production levels.  He also is reported as saying that he thinks “another reason to worry is that energy, food and oil prices are rising faster than fundamentals warrant, and could be driven higher by speculation or if excessive liquidity creates artificially high demand” and that the global economy “could not withstand another contractionary shock” if speculation drives oil rapidly toward $100 per barrel from its current +$70 levels.

Roubini has been proven right in the past.  Intuitively what he says makes great sense to me given the U.S. unemployment situation and the other ‘weakness factors’ that I see in the U.S. economy going forward and comment frequently on in these blog posts.  I suggest you read my post today on Paul Krugman’s views on the ability of the U.S. to continue financing its large annual deficits going forward.  From my perspective if Krugman were to adopt Roubini’s views I think he likely would reach a different conclusion with respect to prospective U.S. annual deficits being ‘possible to deal with’.

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