Dr Doom: 40% chance of US double-dip recession

TORONTO: There is still a 40% chance of a double-dip recession in the US, and the slide back into recession may come within 12 months, according to US economist Nouriel Roubini.

Roubini, dubbed “Dr Doom” for his pessimistic forecasts, said that recent better-than-expected US data had not been enough to change his position, given that the data had still been “dismal.”

 »My view is that the odds are aro und 40%. If a double dip does occur, (it) could occur within the next 12 months« NOURIEL R OUBINI

“My view is that the odds are around 40%,” he told reporters, noting that the outlook for the US economy had “materially weakened” since the start of the year.

“If a double dip does occur, (it) could occur within the next 12 months,” said Roubini, who is a professor at New York University’s Stern School of Business.

Roubini also said Canada would not be able to decouple itself from a US recession completely because of its dependence on exports.

Roubini’s comments came on a day when the Bank of Canada raised its key interest rate by 25 basis points for a third straight time this year, bringing the rate to 1%, but cautioned that a weak US economy would hamper Canada’s recovery.

Canada’s central bank is the first in the Group of Seven to raise borrowing costs after the global financial crisis.

Roubini said his “best assessment is from now on ... the Bank of Canada is probably going to stay on hold and look at the data.”

He spoke to reporters before a C.D. Howe Institute engagement in Toronto. – Reuters