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Prophet of doom predicts long, ugly recession and 40% drop in the S&P 500

Economist Nouriel Roubini, known as “Dr. Doom” – prophet of doom, or ‘Dr. Apocalypse’ – having predicted the housing crash in 2007 and the consequent financial crisis of 2008, he showed great pessimism about the global economy and the performance of the main stock index on Wall Street.

In an interview with Bloomberg, the economics professor at New York University’s Stern School of Business predicts a “long and ugly” recession in the US and worldwide at the end of this year – which could last throughout 2023. to add, predicts a strong correction of the Standard & Poor’s 500, which could go up to 40%

“Even with a simple recession, the S&P 500 could sink 30%,” warns the CEO of Roubini Macro Associates. In a “true rough landing”, which Roubini considers most likely, the index could plunge 40%.

Nouriel Roubini – who earned the epithet of fortune teller for the worst economic and financial crisis since the Great Depression after he warned in 2005 that the speculative boom in the US real estate market could lead to an economic crisis – says that anyone who expects a shallow recession should look at the huge debt ratios of corporations and governments.

As interest rates rise and debt service costs rise, “many zombie institutions, zombie families, companies, banks, ghost banking and zombie countries will succumb”, he points out. And, he stresses, it will be at that time that “we will see who is swimming naked”.

And what does this mean? Only when the tide is low do we realize who was swimming naked. That is, things can look very good and beautiful to a certain extent, but if a company – for example – is over-leveraged waiting for a wave to come and instead catches the low tide, it will be fully exposed.

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