Editor’s Note: The following
are excerpts of a briefing this week Nouriel Roubini delivered to RGE Analysts
in New York.

Roubini
on ‘U’ and ‘V’ Shaped Recoveries

I was
thinking about anemic growth, which I’ve been saying means 1-1.5% growth next
year, which denotes a U-shaped recovery. But what if we see 2% growth next year
for a while? 2% is better than 1.5%, but implies that the output gap is still
rising, assuming that potential GDP and unemployment are also still rising.
This happened in the 2002 recovery for a few quarters. So if growth is closer
to 2% rather than 1% for a number of quarters—and potential growth is 2.75% —to
me that’s still a U-shaped recovery. Even if you go to potential growth at
2.75%, that’s not enough to mop up all that excess slack in the output gap and
labor markets for a while.