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

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. 

“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.”