Economist Nouriel Rubini offers an optimistic outlook for US economic growth, predicting an annual rise of 4% by 2030. He believes trade restrictions could slow the increase of 50 basis points, but technological advancements could drive potential growth of 200 basis points.
Rubini says Trump has become humbled by the financial markets
Economist Nouriel Rubini, who was long known for his warning ahead of the financial crisis, now offers a bullish perspective on US economic growth. Despite concerns over President Donald Trump’s tariff policy, Rubini argues that technological innovation will counter economic drag and ensure that the US will reach 4% annual growth by 2030.
According to Roubini, also known as “Dr. Doom,” financial markets, including the US bond market, have helped to stop the worst impact of the administration’s trade policy.
“Because market traders have won tariffs, bond boroughs have proven stronger than the US president,” Rubini said, referring to Trump’s retreat from widespread tariffs following a market rebound.
After adamantly defending his mutual tariffs despite criticising from economists, industry leaders and political allies, Trump ultimately announced a temporary suspension of policy. This decision came as US bonds are ticking at higher rates, suggesting successful unrest among investors and financial markets.
The slight increase in U.S. Treasury yields were widely interpreted as a response to rising trade tensions, as investors priced potential economic slowdowns and inflationary pressures caused by tariffs. Rising US yields could lead to capital outflows from emerging markets and put pressure on global currencies.
‘Doctor Doom’ predicts shallow US recession
According to Rubini, the financial markets won once again after Trump came to the idea that Federal Reserve Chairman Jerome Powell would fire him for refusing to lower interest rates.
“Trump was the first person to blink, at least for now,” Rubini emphasizes Powell’s solid stance on central bank independence.
Trade restrictions and protectionist policies could slow economic growth of 50 basis points, but Rubini argues that technological advances will drive potential growth of 200 basis points.
“When growth goes from 2% to 4% because of technology, it potentially increases potential growth. But even harsh trade protections and migration restrictions reduce potential growth by up to 50 basis points,” he explained.
The artificial intelligence (AI) boom, as assumed by Roubini, is accelerating investment in the face of policy uncertainty.
“Since ChatGpt was launched in late 2022, AI-related investments have driven the US capital expansion boom,” he said.
Meanwhile, Roubini, a senior adviser at Hudson Bay Capital Management LP, also targeted Europe. He said he faces headwinds of demographic aging, energy dependence and excessive dependence on the Chinese market. He predicts further growth in the innovation gap between the US and Europe.
“The 50-year innovation gap between the US and Europe only expands as AI-driven growth moves from log to exponential,” the economist warned.
Regarding the impact of tariffs on US inflation, Rubini predicts inflation will skyrocket above 4% this year. Growth inflation will ultimately slow down economic growth, “which will lead to a shallow US recession that will last for several quarters.”
Despite trade tensions, inflation and political volatility, Rubini is confident in the US economy’s ability to flourish.
