Nouriel Roubini, renowned for his pessimistic predictions prior to the 2008 global financial crisis, expressed a surprisingly optimistic outlook for US economic growth in the current year. However, this positivity might not bode well for stock markets.
Speaking on Bloomberg Television’s “Surveillance” program, Roubini indicated reduced concerns about the US economy slipping into a recession. He also noted a diminishing likelihood of a “soft landing,” where economic growth and inflation moderate without a recession. This shift in sentiment suggests that Federal Reserve policymakers, who initially forecasted three interest-rate reductions for the year, might ultimately implement fewer cuts.
Roubini cautioned that there’s a real possibility of a scenario referred to as a “no landing,” where economic growth remains robust and inflation stubbornly high. Surprisingly, while strong growth may seem like good news, it could translate to bad news for the market if the Fed refrains from cutting rates as aggressively and promptly as anticipated.
He pointed out that last year, changes in market expectations regarding Fed rate cuts led to a 10% decline in equities. Roubini currently serves as the CEO of consulting firm Roubini Macro Associates LLC and holds the position of professor emeritus at New York University.