The US economy faces a difficult time ahead as consumers stop spending and the fallout escalates from the collapse of the commercial real estate market, economist Nouriel Roubini told CNBC.
Repeating his prediction that the economy faces a threat of a “double-dip” recession and at best a slow-growth U-shaped recovery, Roubini said in a live interview that more banks will fail and residential real estate prices have more room to decline.
Additionally, non-government bonds will face pressure, the securitization market is all but dead, the credit markets are still frozen and consumers will continue to save more rather than spend and boost growth.
“It’s going to be death by a thousand cuts,” said Roubini, chairman of RGE Monitor and economics professor at New York University’s Stern School of Business. “The financial system is severely damaged, and it’s not just the banks.”
Roubini predicted more than 1,000 financial institutions could fail before all is said and done.