Roubini Puts Chances Of Double-Dip At 40%

(RTTNews) - Noted economist Nouriel Roubini on Thursday sees the chances of a double-dip recession at 40%, noting that temporary measures to support the economy earlier this year have become "headwinds" to growth.

Tax credits for home buyers and the government's cash for clunkers campaign, both popular programs that spurred economic activity in the first quarter, are now having a detrimental impact on the economy, Roubini suggested on CNBC this morning.

The economist known as "Dr. Doom" predicted that the government's second quarter growth estimate will be downwardly revised to an annual rate of 1.2 percent "at best."

US growth will be well below 1 percent in the third quarter, Roubini argues.
"With growth at a stall speed of 1 percent or below, the stock markets could sharply correct, and credit spreads and interbank spreads widen while global risk aversion sharply increases," he said in an email quoted by Bloomberg.
"Thus a negative feedback loop between the real economy and the risky asset prices can easily then tip the economy into a formal double-dip."
Roubini, a professor of economics at New York University, correctly predicted the collapse of the credit markets and subsequent stock market crash of 2008.