"Dr. Doom" Nouriel Roubini: Core inflation rate will reach 3.5% in the second half of the year, which may trigger an economic recession
Economist Nouriel Roubini predicts that the core inflation rate in the United States will reach 3.5% by the end of 2025 and warns that economic growth will slow in the second half of the year, potentially leading to a recession. He pointed out that the Federal Reserve will not cut interest rates before December, and the core personal consumption expenditure index remains above the target level, limiting the Fed's policy options. Roubini also mentioned that global trade negotiations will cool down, which could lead to economic damage, and he predicts that many countries will face tariffs of 15%. The Atlas U.S. Fund he manages has performed robustly under pressure, aiming to protect investors from economic shocks
According to the Zhitong Finance APP, economist Nouriel Roubini has stated that he expects the core inflation rate in the United States to rise to 3.5% by the end of 2025. He pointed out that economic growth in the U.S. will slow down in the second half of this year, and a recession may even occur, while the Federal Reserve will not cut interest rates before December. Roubini earned the title "Dr. Doom" for predicting the 2008 financial crisis and the recession triggered by the pandemic in 2020.
Roubini noted that the economic slowdown will exhibit characteristics of a "mild stagflation shock" and warned that inflation remains too high, making it difficult for the Federal Reserve to shift its policy. The inflation indicator favored by the Federal Reserve—the core personal consumption expenditures index—remains stubbornly high. Roubini believes that this index will be well above the target level, putting the Federal Reserve in a difficult position. He has previously foreseen this scenario of slowing growth coupled with high inflation multiple times.
The economist also stated that he expects global trade negotiations to cool down, but it will be impossible to avoid damage to the economy. He predicts that a "moderate" outcome will ultimately emerge, with many countries facing tariffs of 15%.
When asked about potential market shocks, Roubini expressed that he does not believe the U.S. will repeat the scenario of April 2, 2025, when President Trump announced aggressive tariffs, leading to a 20% market crash. Roubini said, "I certainly do not think a situation like April 2 will occur." However, he still issued a warning, clearly stating that the economic path is narrowing and the Federal Reserve's room for action is limited.
Although his predictions are not entirely accurate, the timing of these judgments makes them hard to ignore. He has worked for many years in academia, government, and private investment, and is currently the fund manager of the Atlas U.S. Fund (USAF), launched at the end of last year.
The fund aims to protect investors from threats such as inflation, economic shocks, and climate instability. Although it is still small, with assets of only $17 million, the fund has performed steadily under pressure. Since its launch in November, USAF has risen over 5%, although it lags behind the S&P 500 index. When the tariff news in April triggered a market downturn, USAF only fell by less than 3%, demonstrating some resilience to volatility.
Roubini stated that the fund's goal is not to pursue high returns. "This is not a portfolio prepared for the apocalypse," he explained. The fund is aimed at investors who expect slow, long-term instability rather than sudden collapse, focusing on stability rather than spectacular performance.
Another manager of USAF, Puneet Agarwal, stated that they emphasize stable returns. "We are not particularly pursuing excess returns for a month. We prefer to see slow and steady growth, which is exactly what we have been experiencing," he said.
The ETF holds a mix of gold, short-term U.S. government bonds, and agricultural products. This configuration has been helpful at times but has also dragged down performance during calm months like June. The portfolio has been adjusted since its launch.
Recently, USAF has increased its exposure to cybersecurity and defense technology. They have also purchased short-term inflation-protected bonds and reduced their real estate holdings. Earlier this year, bets on gold provided an advantage for the fund, but in recent weeks, it has become a drag However, this reflects a larger point that Roubini has been advocating.
He believes that the global economy is slowly moving away from the dollar, and investors have begun to prepare for this. "We do not expect a collapse. But the trend is clear, and it is moving in one direction," he said.
The direction Roubini refers to includes rising inflation, slowing growth, geopolitical uncertainty, and a tightening global financial environment
