Roubini: I Was Taken Out of Context

The following is a statement from Dr. Nouriel Roubini, chairman of RGE Monitor, and professor, New York University, Stern School of Business:

It has been widely reported today that I have stated that the recession will be over "this year" and that I have "improved" my economic outlook. Despite those reports -- however -- my views expressed today are no different than the views I have expressed previously. If anything, my views were taken out of context.

I have said on numerous occasions that the recession would last roughly 24 months. Therefore, we are 19 months into that recession. If as I predicted the recession is over by year-end, it will have lasted 24 months, with a recovery only beginning in 2010. Simply put, I am not forecasting economic growth before year's end.

Indeed, last year I argued that this will be a long and deep and protracted U-shaped recession that would last 24 months. Meanwhile, the consensus argued that this would be a short and shallow V-shaped 8 months long recession (like those in 1990-91 and 2001). That debate is over today as we are in the 19th month of a severe recession; so the V is out of the window and we are in a deep U-shaped recession. If that recession were to be over by year-end -- as I have consistently predicted -- it would have lasted 24 months and thus been three times longer than the previous two and five times deeper -- in terms of cumulative GDP contraction -- than the previous two. So, there is nothing new in my remarks today about the recession being over at the end of this year.

I have also consistently argued -- including in my remarks today -- that while the consensus predicts that the U.S. economy will go back close to potential growth by next year, I see instead a shallow, below-par and below-trend recovery where growth will average about 1% in the next couple of years when potential is probably closer to 2.75%.