Roubini to the Street: Chill Out

Even Dr. Doom seemed to be all sunshine and lollipops yesterday. Nouriel Roubini, one of the few economists to accurately predict the magnitude of the economic crisis, told a Chilean investors’ conference in New York that "the freefall of the economy” is over. “There is light at the end of the tunnel," he said. "And the light at the end of the tunnel for once is not the one of an incoming train.”

You can probably guess what happened from there. As Wall Street whooped with joy, stocks promptly rallied. But before long, Dr. Doom was clearly agitated again. He put out a statement last night refuting overly hopeful media reports on his remarks:

“It has been widely reported today that I have stated that the recession will be over 'this year'” and that I have 'improved' my economic outlook. Despite those reports─however─my views expressed today are no different than the views I have expressed previously. If anything my views were taken out of context.

“I have said on numerous occasions that the recession would last roughly 24 months. Therefore, we are 19 months into that recession. If as I predicted the recession is over by year end, it will have lasted 24 months with a recovery only beginning in 2010. Simply put I am not forecasting economic growth before year’s end."

Still, whether he thinks the recession will end in December or January, it's significant that even Roubini is helping to solidify the shaky consensus that we might be looking at a bottom.

But read the entire release before you reach for the champagne. He also thinks a W-shaped recession is possible, which means we'd be dipping back down again in short order. What's more, he's emphatic that the recovery─no matter when the recession ends─ going to be long, slow, jobless, and generally miserable. So much for sunshine and lollipops.