Economist Alerts On Critical Recession Due To CoronaVirus

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U.S. Stocks

Nouriel Roubini predicts a recession from the worldwide coronavirus (COVID-19) outbreak. He is a famous economist. He guesses that the crisis will be “more severe” than the global financial crisis. But fiscal pump-priming is crucial to moderating the impact. 

Governments around the world are taking extreme measures to keep their citizens indoor. And because of this many are now expecting a global recession. Roubini is also known as ‘Dr. Doom’ for his gloomy economic predictions. He adds to those voices that markets have reasons to be down.

“For now, there is not much to be optimistic, and what we can hope is if there’s going to be the right stimulus. And it has to be something of at least 3% of GDP. This is going to be a very severe, but short recession,” Roubini says.

To counteract the widening effects of social distancing, President Donald Trump and his top advisors are currently discussing an extensive stimulus. This includes cutting every American a check.

Roubini agrees and suggests that Congress give $1,000 to “every single U.S. resident” before it’s too tardy.

“It doesn’t matter if you’re young, old, employed, unemployed, student, formerly employed, partially employed, hourly worker, contractor, gig, or small business,” the New York University economist says.

“Everybody needs at $1,000 or otherwise we’ll end up in the Great Depression at this point.”

Reality Will Bite US Soon

Retail and manufacturing data this week awards investors a small taste of the hideousness. And neither figure was attractive.

With that in mind, Roubini suspects the collapse will start during the current quarter. As the pandemic spurs mass closures of businesses will take place. And many service sector workers will lose their wages. He anticipates a contraction in economic growth through the second quarter, and “most likely” in Q3.

“But if we have the monetary easing we have right now if we control the pandemics by doing systematic quarantines. Maybe by June-July, the pandemic is stopped. And maybe by the fourth quarter of this year, we are going to have an economic recovery,” he says.

The economist adds that the U.S. lacks “fiscal stimulus”. Since the Federal Reserve has done “everything under the sun.” Within the space of a week, the Fed has cut rates to zero. And thrown trillions at the business to backstop financial institutions, non-bank corporations and lending markets overall.

Yet Roubini shows out that what the economy requires is the fiscal stimulus to backstop declining private demand. Especially as exports, consumption, residential investment, and capital expenditures fall.

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