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Stocks could plummet another 25% if there's a recession next year, 'Dr Doom' economist Nouriel Roubini warns

nouriel roubini
Nouriel Roubini has warned that an economic crash could lead to the S&P 500 falling 25%.Bobby Yip/Reuters
  • The S&P 500 could fall 25% if there's a recession next year, Nouriel Roubini has warned.

  • The economist known as 'Dr Doom' warned that the Federal Reserve will struggle to avoid a 'hard landing' scenario in its battle to tame inflation.

  • Roubini has repeatedly flagged the threat of a severe economic downturn.

The worst may not be over yet for US stocks given mounting risks of a recession next year, Nouriel Roubini has warned.

The economist, often dubbed "Dr Doom" for his bearish predictions, said Tuesday that the benchmark S&P 500 stock index could slide another 25% from current levels should the US economy suffer a hard recession in 2023.

"If we have something more severe than a short and shallow recession but not as severe as the Global Financial Crisis, you have another 25% downside potentially in the markets," Roubini told Bloomberg.

Multiple banks and economists have warned that a recession is likely to rattle equities next year.

The Federal Reserve's ongoing monetary-tightening campaign is one factor that's weighing on stocks, with the central bank raising the cost of borrowing by 375 basis points this year.

Roubini said he believes that the Fed will struggle to avoid a so-called "hard landing" — the scenario where it fails to avoid a recession when bringing down inflation toward its 2% target level.

"In the last 60 years there's never been a case in US history where you have inflation above 5% and unemployment below 5% that when the Fed starts to raise interest rates, you get a soft landing," he said. "In every case you get a hard landing."

This isn't the first time that Roubini has warned about a potential economic crash.

'Dr Doom' acquired his nickname with a series of pessimistic predictions in the 2000s and has repeatedly raised the alarm about a stagflationary debt crisis that he thinks will trigger "the mother of all economic crises".

Read more: Brace for the Fed to steer the US into recession, Nouriel Roubini has warned. Here's where 'Dr Doom', Sam Zell, and 3 other top experts think the economy will suffer.

Read the original article on Business Insider