The global recession is nearly over, but the recovery is far from certain, writes NYU professor and professional pessimist Nouriel Roubini in a Financial Times op-ed. The economist who predicted the financial crisis chides colleagues who foresee a V-shaped recovery, with a quick return to growth. Rather, the recovery will be either U-shaped, with growth "anemic and below trend for at least a couple of years," or even W-shaped, with a second, smaller recession still to come.
Unemployment, above 10% in advanced economies by next year, is the main reason for a sluggish recovery; not only will it hurt consumer demand, but it will weaken workers' skills for years to come. Yet even a dragging economy is better than a double-dip recession, which may happen if governments push the world into stagflation or if another oil shock chokes the economy. When it comes to unwinding their "massive monetary and fiscal easing," writes Roubini, "policymakers are damned if they do and damned if they don’t."