Saturday, February 25, 2012

Roubini : Fiscal tightening will escalate in 2012 and 2013

Nouriel Roubini : ....while US data have been surprisingly encouraging, America's growth momentum appears to be peaking. Fiscal tightening will escalate in 2012 and 2013, contributing to a slowdown, as will the expiration of tax benefits that boosted capital spending in 2011. Moreover, given continuing malaise in credit and housing markets, private consumption will remain subdued; indeed, 2 percentage points of the 2.8 per cent expansion in the last quarter of 2011 reflected rising inventories rather than final sales. And, as for external demand, the generally strong dollar, together with the global and Eurozone slowdown, will weaken US exports, while still-elevated oil prices will increase the energy import bill, further impeding growth. - in project syndicate
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