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Top American economist warns US recession may be ‘long and severe’

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in Manhattan in New York City, New York, the United States, October 26, 2020. (File by Reuters)

An Iranian-American economist has warned that the United States is at the cusp of a “long and severe” recession, which he says could bring financial distress "across the board."

Nouriel Roubini, who accurately predicted the housing bubble burst in 2008, was quoted as saying by Bloomberg that the country is in a "sharp slowdown".

"We are in a sharp slowdown, we've had two negative quarters of growth in the first half [of 2022]," Roubini said. "The recession is going to be long, protracted, severe, and associated with financial distress across the board."

Roubini, also referred to as ‘Dr. Doom,’ said the US economy has left many Americans seeing higher grocery bills despite a dip in July in overall inflation. 

The Federal Reserve has attempted to curb inflation by raising interest rates. The Fed most recently upped interest rates another 75 basis points in late July to thwart an inflation rate of 8.5 percent, which followed a similar raise in June — marking the largest back-to-back increases seen in decades. 

Roubini implied the increases are not enough to combat inflation. 

"The Fed funds rate should be going well above 4 percent to push inflation towards 2 percent," he said. "If that doesn't happen, inflation expectations are going to get unhinged, or you'll get a hard landing."

According to an article by Bankrate, although the Fed has been raising interest rates, its borrowing rate is still historically low. Some experts say the country is heading for, or may already be in recession.

The harrowing GDP report released on July 28, which showed the economy has contracted for the second quarter in a row, fueled the fears of a recession.

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