- Nouriel Roubini, the New York University economist
In January, Nouriel Roubini, the New York University economist, who is known for predicting the housing bust and global financial crisis, claimed the U.S. economy will disappoint this year. He claimed the world's largest economy will pick up, however, the pace of growth will not be substantial enough to raise wages for Americans. As a result, consumers will be left with limited cash to spend, and keeping in mind the fact the economy is highly dependent on the households, the growth is likely to disappoint.
A couple of months later, Roubini even mentioned the "b" word, which is usually whipped out with caution. He claimed there is a growing credit bubble in the United States. It is not a tragedy yet, and the economy is not on the brink of a major collapse, however, policymakers should take immediate action to avoid it. Roubini claimed the central bank will keep the key lending rate around current level even after they make a rate hike. Such a slow process of normalization is likely to keep the spigot of borrowing flowing, pushing the economy. At the same time, it can lead to risky lending practices. Therefore, a bubble is inflating and can pop any time soon. He also drew a parallel line with what has happened in ‘06 and ‘07. In his assessments, he gives the economy a year or two before the bubble will be out of the Federal Reserve's control.
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