Economist Stephen Roach issues new dollar crash warning, sees double-dip recession odds above 50%
Economist Stephen Roach warns next year will be brutal for the dollar.
“The current account deficit in the United States, which is the broadest measure of our international imbalance with the rest of the world, suffered a record deterioration in the second quarter,” he said. “The so-called net-national savings rate, which is the sum of savings of individuals, businesses and the government sector, also recorded a record decline in the second quarter going back into negative territory for the first time since the global financial crisis.”
At the time, Roach estimated it would happen in the next year or two, maybe more. But now, he sees it happening by the end of 2021.
“Lacking in saving and wanting to grow, we run these current account deficits to borrow surplus saving, and that always pushes the currencies lower,” he said. “The dollar is not immune to that time honored adjustment.”
Roach, who’s former chairman of Morgan Stanley Asia and lived in Asia during the deadly 2003 SARS epidemic, is also worried about the state of the economic recovery as U.S. coronavirus deaths top 200,000 and Europe sees a resurgence in infections.
He puts the probability of a U.S. double-dip recession above 50%.
Reference: CNBC
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