Well-known economist Nouriel "Dr Doom" Roubini recently praised the strength of the US economy, despite the Federal Reserve's tight monetary policy
In a recent Bloomberg Television interview, economist Roubini said that the US continues to rise while other major economies begin to shrink. He said the following:
"It was surprising that, given the extent of monetary tightening, some economies have proved resilient. But the most resilient economy is the United States …
The eurozone is heading towards a shallow recession… China is a structural problem. So you are generalising a bit about what is happening in the global economy right now. The US is probably the bright spot right now."
While the US economy is flexing its muscles, Roubini indicated that this is likely to prompt the Fed to keep raising interest rates. A growing US economy indicates that there is still a lot of liquidity in the system, which does not bode well for the Fed's campaign to push inflation back to the 2% target. Thus, he indicated the following:
In the US, paradoxically, despite interest rate hikes by the Fed to above 5%, the economy has so far been growing above the potentially tight labour market and goods market. That is good news in terms of achieving a soft landing, but it is actually bad news for the Fed, because it implies that the Fed is not ready yet.
It may have to raise one or two more times. Eventually, the Fed Funds rate could get a six (6%) instead of a five (5%). And the more that happens, the greater the risk that there will eventually be at least a short and shallow recession."
Check the source of this article, or click her to read more about blockchain.
