An economist in the United States recently warned Americans that a recession will be “long” and “severe” amid the record-high inflation in the country under the Biden administration.
On Monday, economic expert Nouriel Roubini, also referred to as “Dr. Doom,” and known for his bearish tendencies claimed that a recession could bring financial distress “across the board.”
Roubini’s statement came after reports revealed that the U.S. economy was strangled, leaving Americans suffering from higher grocery bills despite a dip in July in overall inflation.
Amid the inflation, the Federal Reserve raised the interest rates in an attempt to curb inflation.
Meanwhile, several experts claimed that the country is heading for, or may already be in, a recession.
“We are in a sharp slowdown, we’ve had two negative quarters of growth in the first half [of 2022]. The recession is going to be long, protracted, severe, and associated with financial distress across the board.” Roubini, an Iranian American economist said on Monday.
Moreover, late July, the Federal Reserve then again increased the interest rates by another 75 basis points to fight an inflation rate of 8.5 percent. It was then followed by a similar raise in June that marked the largest back-to-back increases seen in decades.
However, Roubini argued that the increases aren’t enough to combat inflation.
“The Fed funds rate should be going well above 4 percent to push inflation towards 2 percent. If that doesn’t happen, inflation expectations are going to get unhinged, or you’ll get a hard landing.” Roubini explained.
He also added that he felt although inflation may have peaked, he’s unsure of how fast it may fall.
“I don’t think the monetary policy is tight enough to push inflation to 2 percent fast enough,” he said.
Meanwhile, despite the recession warnings from the economists, Government officials have continued to reject the claim that there is a recession.
“Recession probabilities are never zero, but trends in the data through the first half of this year used to determine a recession are not indicating a downturn,” the White House claimed and argued that recession is simply “two consecutive quarters of GDP contraction.”
