Economic guru Nouriel Roubini says the United States will experience an anemic recovery this year, with little progress on the employment front.
The New York University economist predicted in a recent speech that the economy will grow 3 percent in the first half of the year and then slip back to 1 percent to 1.5 percent in the second half.
And while payrolls will eventually rebound, the unemployment rate will likely reach 10.5 or 11 percent first, Roubini said.
The rate totaled 10 percent in December.
“Some of these jobs are gone forever in the financial sector, construction and real estate,” he told Bloomberg.
The wages lost from those jobs will lessen consumer demand, curbing economic growth, Roubini maintains.
The U.S. might even suffer through a double-dip recession, he says.
On the bright side, Roubini sees slim risk of rising inflation, thanks to the weakness of labor markets in the U.S. and Europe.
With consumer demand weak, companies also don’t have much pricing power.
Inflation will remain quiescent until 2012 and perhaps beyond, he says.
And Roubini expects strong growth in emerging markets, which aren’t burdened with bad debt like their more developed brethren.
Many experts agree with Roubini’s inflation outlook.
“Consumer pricing pressures remain very subdued,” Russell Price, senior economist at Ameriprise Financial, told Bloomberg.
“It gives the Fed further leeway to continue keeping rates where they are well through 2010.”
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