“Dr. Doom” Says Stocks Will Decline 25% if the US Economy Dips Into Recession

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Nouriel Roubini
Nouriel Roubini

US stocks could slump to their worst levels of the current bear market if the US economy falls into its sharpest recession in more than a decade, according to economist Nouriel Roubini. 

Dubbed “Dr. Doom” for his often ominous outlook, the New York University economics professor told Bloomberg in a broadcast interview Wednesday that the US economy is unlikely to dodge a recession as the Federal Reserve raises interest rates during a time of soaring inflation levels alongside a disgraceful unemployment rate. 

Roubini said the S&P 500 typically declines by 30% from peak to trough in times of short and shallow recessions. The broad-equity index slumped by 50% during the 2008 Global Financial Crisis, he noted. 

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“So even if we had a mild recession, right now, the market is down, depending on the day, 15% from the peak, you’ll have another 15% leg down,” he said. “If we have something more severe than a short and shallow recession, but not as severe as GFC …. you have another 25% downside potentially in the markets.”