At this year’s World Economic Forum Annual Meeting, Roubini, a.k.a Dr. Doom, was his customary gloomy self.
America is in for another twelve months of “anemic, subpar growth,” which he pegged at 1.6 per cent, and a “very high” unemployment rate. This despite a rebounding housing market, a helpful boost from the energy sector (think: shale oil and gas), manufacturing employment looking half-decent and the Federal Reserve continuing to pump money into the economy.
Most of the blame for dragging down what could be a healthy pace of growth, Roubini said, goes to the usual suspects: Washington lawmakers. Their stop-and-go tax hikes and spending cuts will likely be enough to shave 1.4 per cent off GDP growth in 2013, but not enough to address the U.S.’s long-term debt woes.
But financial markets are also to blame for America’s paralysis, Dr. Doom continued. “The bond vigilantes are asleep at the wheel,” he said, hinting at the rock-bottom interest rates at which the U.S. has been able to borrow despite its gargantuan debt and seeming incapacity to do anything about it.
Investors’ concerns over countries like Greece, Spain, Italy and Portugal have forced hard political choices in Europe, he noted. Alas, that blessing in disguise has so far eluded Washington.