Traders work during the opening bell at the New York Stock Exchange (NYSE) on March 19, 2020, at Wall Street in New York City. (AFP photo)
The United States is on a collision course with a double-dip recession as V-shaped recovery mania on Wall Street is leading investors astray, a prominent economist warns.
Speaking on CNBCís "Trading Nation" Wednesday, Stephen Roach said the US is on its way to suffer a second dramatic downturn.
"The odds of a relapse, not just the virus but in the economy itself - the so-called dreaded double-dip, is very real," the former Morgan Stanley Asia chairman said.
He noted that recessions are historically double-dip, predicting this contraction will follow the same pattern in spite of its unusual origin.
"This behavioral capitulation on the demand side of the US economy is going to continue to create a lot of problems for businesses, business hirings, [and] potential corporate bankruptcies in the second half of this year," he said.
In January, Roach, a leading expert on Asia, anticipated the coronavirus pandemic would eclipse the SARS impact in 2003 and could destroy the global economy, including the United States.
He said Wednesday that US consumer demand will undergo a difficult recovery in spite of reopenings.
"Both economies were able to bring production back quickly, but theyíre struggling to bring consumer demand back especially for face to face services where individuals are fearful of getting re-infected," he said.
He called for a new US virus aid package, describing it as "essential" in this current crisis, though he noted the long-term consequences will be damaging.
"Our savings and current account dynamic is starting to look terrible," added Roach, who contends the country will face a massive budget deficit too.
In addition to inflation which he says will result from the pandemic, Roach still expressed concern about a dollar crash.
Last month, speaking on "Trading Nation," he warned that the dollar would drop 35% over this year and 2021, and over the past three months, the greenback is down over 5%.
"The dollar is in the early stages of whatís going to be a protracted downturn," Roach said.
SOURCE: PRESS TV