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The rivalry between the U.S. and China could be so disruptive that it’s starting to decouple the global economy and eventually causing a recession, according to Nouriel Roubini, the economist famously called the housing bubble.
“The consequences of this trade and tech war and cold war [are] the beginning of de-globalizaion … and the decoupling of the global economy. We’ll have to redo the global tech supply chain. And eventually by next year, if this escalates, it will be a global recession,” said the head of Roubini Macro Associates in an interview with Bloomberg TV on Tuesday.
The U.S. and China have recently reached a truce in their year-long trade war after the two countries slapped tariffs on billions of dollar worth of each other’s goods. Yet Roubini is pessimistic that the two largest world economies will work out a long-term agreement anytime soon.
“My base case is … the trade and tech war between the U.S. and China is going to get worse. Manufacturing is already in a recession globally. It’s affecting services…The tech sector is in a slowdown,” Roubini said.
Roubini, who has often been referred to as “Dr. Doom” because of his bearish outlook, said there have already been signs of a global recession.
“It has already been in the data — the collapse of CAPEX. And once the CAPEX is down, then the industrial production is down and the employment is down, and you have the beginning of a global recession that starts in tech, then in manufacturing, then in industry and then goes to services,” he said.