{"id":152965,"date":"2025-11-26T00:34:08","date_gmt":"2025-11-26T00:34:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/il\/152965\/"},"modified":"2025-11-26T00:34:08","modified_gmt":"2025-11-26T00:34:08","slug":"dr-doom-nouriel-roubini-breaks-with-the-crowd-on-the-ai-bubble-saying-the-u-s-is-headed-for-a-growth-recession-and-not-a-market-crash","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/il\/152965\/","title":{"rendered":"\u2018Dr. Doom\u2019 Nouriel Roubini breaks with the crowd on the AI bubble, saying the U.S. is headed for a \u2018growth recession\u2019 and not a market crash"},"content":{"rendered":"

For nearly two decades, esteemed economist Nouriel Roubini<\/a> has worn the nickname<\/a> \u201cDr. Doom\u201d with honor. He earned it in the mid-2000s for warning<\/a> of a housing crash that Wall Street dismissed, until he was proven catastrophically right.\u00a0<\/p>\n

Since then, the NYU Stern School of Business professor emeritus has become one of the most recognizable bears in global finance, regularly sounding alarms<\/a> about debt spirals, geopolitical shocks, pandemics, AI disruptions, and what he once called \u201cthe mother of all crises.\u201d<\/a><\/p>\n

So it\u2019s perhaps surprising, even disorienting, that in the midst of investors teetering on the edge of a bear market, Roubini is breaking with his cohort\u2014including fellow 2008-financial-crisis-prophet Michael Burry<\/a>\u2014to dismiss their pessimism about the U.S. economy as misplaced.<\/p>\n

In a new essay<\/a> for the Financial Times, the economist argues that the conventional view<\/a>\u2014that America\u2019s \u201cLiberation Day\u201d tariffs would trigger stagflation, tank the stock market, kneecap the dollar, and end U.S. exceptionalism\u2014is simply wrong. Instead, he sees something close to the opposite: a short period of cooling growth, followed by a powerful rebound led by technology and capital spending that keeps the U.S. firmly in the top spot.<\/p>\n

\u201cThe now common view that the U.S. stock market is in a massive bubble and bound to crash is incorrect over the medium term,\u201d he wrote. On the other hand, what he predicted isn\u2019t necessarily the rosiest. The near-term picture looks like a \u201cgrowth recession,\u2019 he said, meaning slower, below-potential GDP. It\u2019s not the hard landing or 1970s-style stagflation<\/a> many have predicted, and it isn\u2019t a bubble popping, but it\u2019s a lopsided economy, as many Wall Street analysts have also noticed.<\/p>\n

Tariffs won\u2019t topple the recovery<\/p>\n

Roubini, who once warned of a \u201cmega-threatened age\u201d\u2014the era where AI, aging populations, and global instability threatened our prosperity\u2014now argues the most extreme fears about tariffs and policy missteps haven\u2019t materialized. That\u2019s partly because, he says, this administration is responsive to market reactions. When asset prices slumped<\/a> immediately after the tariff announcement, the administration \u201cblinked<\/a>,\u201d softening policy and opening the door to more conventional trade negotiations.<\/p>\n

By next year, he says, growth will reaccelerate. The Fed is undergoing a period of monetary easing, fiscal stimulus is still flowing, and\u2014critically\u2014AI-related capital expenditure continues to surge<\/a>.<\/p>\n

Roubini\u2019s arguments align closely with two of Wall Street\u2019s top analysts: Torsten Slok of Apollo Global Management<\/a> and Mike Wilson of Morgan Stanley<\/a>. Slok, known for his \u201cDaily Spark,\u201d combining insightful charts with brevity, argued on Nov. 20<\/a> that the economy is \u201clikely to reaccelerate in 2026.\u201d Just days earlier, he had warned of inequality<\/a>, saying: \u201cIt is a K-shaped economy for U.S. consumers.\u201d He has also flagged extreme concentration and valuations<\/a> in the stock market, with the Magnificent Seven<\/a> running far ahead of the rest of the market.\u00a0<\/p>\n

Wilson, chief equity strategist for Morgan Stanley, has been predicting a \u201crolling recession<\/a>\u201d for years, arguing that different sectors of the economy shrank at different times, resulting in something that felt like a recession, but unevenly distributed. This changed in April 2022, when a \u201crolling recovery<\/a>\u201d set in, he has argued since then, forecasting an economic boom ahead. Wilson has argued for the possibility of a correction in stocks but, like Roubini, does not see a crash as imminent.\u00a0<\/p>\n

Tech > tariffs<\/p>\n

The core of Roubini\u2019s argument rests on a simple hierarchy: Tariffs and policy noise are temporary, but technological leadership that results in innovation compounding over decades is not.<\/p>\n

\u201cTech trumps tariffs,\u201d he writes.<\/p>\n

He estimates U.S. potential growth could double from 2% to 4% by the end of the decade, powered by innovation in AI and machine learning, robotics, quantum computing, commercial space, and defense technology. While this agrees with many Wall Street predictions (Goldman Sachs<\/a> sees real potential growth reaching 2.3% in the early 2030s, for instance), the prediction of 4% blows most others out of the water.\u00a0<\/p>\n

However, those industries, Roubini argues, will continue to deliver the \u201cexceptionalism\u201d that has set the U.S. apart for the past 20 years\u2014to the extent that productivity will boost the economy by double digits.\u00a0<\/p>\n

If potential growth rises, he says, equity returns should, too. When growth averaged only 2% over the past two decades, annual returns still hovered in the double digits. Faster growth means even faster earnings expansion, and valuations that look elevated today may be supported rather than speculative.<\/p>\n

Roubini has been striking a more positive tone for about a year now\u2014in August 2024, while everyone feared a downturn was coming and grew frustrated that the Fed wouldn\u2019t ease, he calmed market fears again<\/a>.\u00a0<\/p>\n

Debt\u2014and the dollar\u2014look less dangerous than feared<\/p>\n

One of the most persistent fears around AI-driven spending is debt sustainability. But Roubini argues that this math would change if growth rises even modestly.<\/p>\n

The Congressional Budget Office projects debt-to-GDP soaring under 1.6% real growth assumptions. But if growth averages 2.3% or higher, the ratio stabilizes. At 3% or more, it falls, meaning that we could potentially grow ourselves out of debt; an argument President Donald Trump has also used.<\/a><\/p>\n

A tech-driven \u201csupply shock\u201d could also push inflation lower over time as production costs drop while productivity booms, meaning higher real rates may not translate into higher nominal yields. Even external liabilities look manageable, he argues, because rising tech investment tends to attract foreign equity inflows, similar to how \u201cemerging-market\u201d economies finance growth during a resource boom.<\/p>\n

Roubini also dismisses the widely discussed decline of the dollar<\/a>, since he believes that the U.S. will accelerate while Europe stagnates, and thus the dollar will ultimately strengthen.\u00a0<\/p>\n

Notably, \u201cDr. Doom\u201d admitted that the U.S.\u2019s top adversary, China, is at least on par with the U.S. in innovating in the \u201cmost important industries of the future,\u201d such as AI and robotics. However, he doesn\u2019t seem too concerned with the AI arms race.\u00a0<\/p>\n

\u201cThe U.S. economy and markets are best positioned among advanced economies,\u201d Roubini wrote. \u201cThey will continue to benefit from the U.S. being the most innovative advanced country.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"For nearly two decades, esteemed economist Nouriel Roubini has worn the nickname \u201cDr. Doom\u201d with honor. He earned…\n","protected":false},"author":2,"featured_media":152966,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[114,1575,9575,184,85,46,92943,1973,4315,12981,36195,41401],"class_list":{"0":"post-152965","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-business","9":"tag-debt","10":"tag-economic-growth","11":"tag-economy","12":"tag-il","13":"tag-israel","14":"tag-nouriel-roubini","15":"tag-recession","16":"tag-tariffs","17":"tag-tariffs-and-trade","18":"tag-tech-bubble","19":"tag-tech-stocks"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/152965","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=152965"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/152965\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/152966"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=152965"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=152965"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=152965"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}