"So it's perhaps surprising, even disorienting, that in the midst of investors teetering on the edge of a bear market, Roubini is breaking with his cohort - including fellow 2008-financial-crisis-prophet Michael Burry - to dismiss their pessimism about the U.S. economy as misplaced. In a new essay for the Financial Times, the economist argues that the conventional view - that America's "Liberation Day" tariffs would trigger stagflation, tank the stock market, kneecap the dollar, and end U.S. exceptionalism - is simply wrong."
""The now common view that the U.S. stock market is in a massive bubble and bound to crash is incorrect over the medium term," he wrote. On the other hand, what he predicted isn't necessarily the rosiest. The near-term picture looks like a "growth recession,' he said, meaning slower, below-potential GDP. It's not the hard landing or 1970s-style stagflation many have predicted, and it isn't a bubble popping, but it's a lopsided economy, as many Wall Street analysts have also noticed."
Tariffs are unlikely to cause stagflation, a stock-market collapse, a weakened dollar, or the end of U.S. economic leadership. The near term is expected to be a growth recession characterized by slower, below-potential GDP rather than a hard landing or 1970s-style stagflation. The stock market is not assessed as a massive bubble destined to burst over the medium term. A powerful rebound led by technology investment and capital spending is expected to restore stronger growth. The economy will be lopsided in the short run, with uneven sectoral performance despite overall resilience.
Read at Fortune
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