The Great Recession may have been the best thing ever to happen to Nouriel Roubini. Once a relatively obscure academic macroeconomist, he won fame as "Dr. Doom," the man who predicted, in 2006, just how and when the global financial system would collapse. So how have the last few years treated him? Business has been good -- very good. His forecasting record? Not quite.
Even before his prophetic prediction, Roubini had branched out from an economics professor's typical activities. In 2004, he transformed his personal website into a small research firm that became known for the "RGE Monitor," a high-end, subscriber-only collection of news and views about the global economy. These days, his name has become the bigger brand; the old RGE URL redirects to roubini.com, where his self-described "ugly" face greets every visitor.
The mind behind that face is now the linchpin of an eight-figure business. "We started with five people in 2005, and now we employ almost 100," Roubini told me. "We started in New York, and now we have a big office in London and now also in New Delhi. We started with global macro, and now we've hired a bunch of strategists who derive the asset-pricing implications of our views."
And views are one commodity Roubini has in abundance. He's a fixture on the smarter late-night talk shows and even showed up on the big screen in Oliver Stone's Wall Street: Money Never Sleeps (with the apt credit "Economist on TV"). He has argued forcefully that the Federal Reserve should make more targeted purchases of securities -- which it finally started doing in September, to the tune of $40 billion per month -- and that consumers' debts, including mortgages and credit cards, need more restructuring to extend and reduce payments. So far, though, he thinks the Fed has done a better job addressing the downturn than counterparts such as the European Central Bank.
He's also sure that the downturn could have been much worse without a strong policy response from the major economies around the world. "The Great Recession could have turned into a Great Depression 2.0 if we had not adopted very aggressive monetary and fiscal easing," he told me. Indeed, as a quick review of his forecasts over the course of the recession shows, things have turned out quite a bit better than he expected.
In April 2009, Roubini predicted that the U.S. economy would shrink in the second half of the year and that it would manage to grow only 0.5 to 1 percent in 2010. Despite a lot of headwinds, the economy managed to expand through all six quarters at an average annual rate of about 2.5 percent. A few months later, he suggested that the unemployment rate would soon hit 10 percent and then peak at 11 percent in 2010. It did indeed hit 10 percent in October 2009 but has been lower in every month since.
So was Roubini wrong? He wouldn't go that far. "What I've been saying, and I think that has been correct, is that the recovery will be anemic and off-trend because there's a painful process of deleveraging," he said. "I think I got it much better than the consensus. Could things in the U.S. be even weaker? Yes, but not much weaker."