The Economic Growth to remain anaemic in the United States in 2012

Nouriel Roubini : Good news is going to be temporary. In terms of some of macro data, the US has been better than expected, but economic growth in the US is going to be anaemic this year. Subpar below trend, at best 1.5% growth year over year for a number of reasons. First of all, the problems of the Eurozone and through trade and financial links, those are going to slow down economic growth in the United States. Secondly, there will be a significant fiscal drag in the United States this year because of the gridlock in Congress. Thirdly, since domestic demand is going to be weak because of private and public sector deleveraging, the way that the US could grow faster is by an improvement in net exports. However, trade balance is not going to improve because growth is slowing down in the rest of the world and Europe. That's going to be bad for US exports. Also, the dollar is going to be stronger and not weaker and that's going to worsen the US trade balance. Oil and energy prices are going to remain high because of geopolitical risks in the Middle East and, therefore, the oil import bill for the US is not going to improve. Therefore, the net exports of the US are not going to improve and that's going to be another factor that's going to be a source of economic weakness. Finally the US consumer is still very challenged both income-wise, wealth-wise and debt-wise. Income is not growing very much because the labour market is improving only weakly. The wealth has been sluggish because equity market has been flat and housing prices have been falling. The US consumer still has a huge amount of debt and debt servicing. The cost of deleveraging of the US consumer has been just postponed. All these factors suggest that economic growth is going to remain anaemic in the United States in the next few quarters. - in ET Now