Nouriel Roubini, who hates all things optimistic, particularly as they relate to the global economy and the financial future of nations, cast a vote for the United States as a potential “beacon of hope.” In a world in which many experts favor China, and even Germany, as the nation with the best economic prospects, Roubini looks at America as a possible model of what a financial recovery looks like, despite the country’s huge debt burden.
Roubini made his observations about the United States after flying over most of the world as part of a rapid circumnavigation:
In the last four weeks, I have traveled to Sofia, Kuala Lumpur, Dubai, London, Milan, Frankfurt, Berlin, Paris, Beijing, Tokyo, Istanbul, and throughout the United States. As a result, the myriad challenges facing the global economy were never far away.
Even in what have must be the haze of exhaustion, he attacked those nations and regions that most economists already have brutalized, and he added a special criticism of China. His comments about Europe are like many others. A recession may turn into a depression as austerity sucks down any potential recovery. In Japan, deflation may not be trumped by “monetary policy.” Roubini adds nothing to the debate about the economic implosion of most of the Middle East.
Roubini has caught up to the argument that pollution, among other weaknesses, could hobble China’s growth. The New York Times recently reported:
Outdoor air pollution contributed to 1.2 million premature deaths in China in 2010, nearly 40 percent of the global total, according to a new summary of data from a scientific study on leading causes of death worldwide.
Roubini adds to that “state-owned enterprises, provincial governments, and the military” control much of China. He comes to the conclusion that “China could face a hard landing by late 2014 if critical structural reforms are postponed.”
The U.S. recovery, according to Roubini, is more impressive than many economist are willing to say. If so, gross domestic product could rise much faster than the consensus estimate of 2% to 3%. Roubini does not make that forecast, but his observations make it for him:
In this fragile global environment, has America become a beacon of hope? The US is experiencing several positive economic trends: housing is recovering; shale gas and oil will reduce energy costs and boost competitiveness; job creation is improving; rising labor costs in Asia and the advent of robotics and automation are underpinning a manufacturing resurgence; and aggressive quantitative easing is helping both the real economy and financial markets.
Roubini worries about those things that almost everyone else does — Washington gridlock and high unemployment.
In the final analysis, however, Roubini has voted for the U.S. economy over almost any other. Based on recent numbers from the federal government and private research about how far along America is on the road to recovery, he is likely to be right.