Economist Nouriel Roubini, who has gained fame as the "Dr. Doom" of the current downturn, thinks the odds of a double-dip recession have risen to more than 40 percent.
Roubini, a New York University professor who gained renown for accurately calling the housing bubble, revealed his latest gloomy view on his Twitter feed Wednesday, telling his 20,000-plus followers that “Q3 GDP growth very likely to be below 1%; and likely to be closer to 0% than to a pathetically lousy 1%. So double dip risk is now > 40%”
Roubini expanded on his tweet in an interview on CNBC Thursday:
The economy grew at a sluggish 2.4% pace in the second quarter, but that number will be revised Friday morning, and many economists like Roubini believe it will be sharply reduced. If GDP ultimately falls back below zero for at least a quarter or two that would indicate a double-dip -- an economy that falls back into recession after a brief recovery from an initial downturn.
Roubini said several factors that acted as tailwinds boosting the economy in the first half of the year “are going to be essentially headwinds” in the second half.
For example, temporary employment gains from the decennial U.S. census will disappear, and there will no longer be “a number of tax policies that stole demand and growth from the future,” such as tax credits for homebuyers.
“Based on the latest economic data, it looks like the third quarter is going to be well below 1 percent, and certainly closer to zero than to 1 percent, based on the current data,” he told CNBC. “And that’s just the beginning of the second half of the year.”