Buried amidst the increasingly gloomy economic news of the last few weeks -- which includes stubbornly high unemployment, rising foreclosures and a grim outlook from the Fed, among other factors -- is a growing sense of doom among some prominent economists.
More than a few top economic thinkers have significantly upped the chances of a return to a recession. Today, the noted bear Nouriel Roubini, the cofounder and chairman of Roubini Global Economics and a professor at New York University's Stern School of Business, delivered a grim prognostication via Twitter: "Risk of a double dip recession in advanced economies (US, Japan, Eurozone) has now risen to 40%."
Roubini is not alone in his concern. Last week, David Rosenberg, the Gluskin Sheff economist (formerly of Merrill Lynch), whose words have become must-read barometers of bear-ishness, said that the chances of a double-dip recession in the U.S. are now "higher than 50-50."
Yale's Robert Shiller, one of the nation's preeminent housing experts and the co-creator of the widely watched Case-Shiller Index, also said last week that there's greater than a 50 percent chance of falling into another downturn. The culprit, according to both Rosenberg and Shiller, is, quite simply, jobs. Here's Marketwatch:
Shiller pointed to the nation's stubbornly-high unemployment as a root cause of lingering economic woes. And with the Federal Reserve running out of bullets to fight a second recession, he urged Congress to join the battle and focus on putting people back to work.
"Beyond the Fed, I'd like to see the government take a renewed stimulus package focused on creating jobs [and] on activities that involve a lot of people," Shiller said.
Earlier this month, a paper written by a visiting scholar at the San Francisco Fed put the odds of a second recession in the next next 10 months at "no greater than a coin toss."
Mohamed El-Erian, the CEO of PIMCO, the world's largest bond investor, who the creator of the now ubiquitous phrase "new normal," said earlier this month that the U.S. faces a 25 percent chance of a double dip and deflation.
The dire forecasts are coming even from some of Wall Street's most profitable banks. Last week, Goldman Sachs warned in an email to clients that the chances of another downturn are "25 to 30 percent."
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