Against consensus, predicted a slowdown-not a full recession-amid tariffs and policy shocks.

Roubini has again recently challenged the new pessimistic conventional wisdom about the US and the global economy that followed the re-election of Donald Trump and his protectionist policies in 2025.

Indeed, since Donald Trump’s “Liberation Day” on April 2, when he announced sweeping trade tariffs on friend and foe alike, the conventional wisdom about the US economy’s short-term and the medium- to long-term prospects has turned pessimistic. According to the new consensus: higher tariffs will cause a US and global recession; US exceptionalism is over; America’s fiscal and current-account deficits will become unsustainable; the US dollar’s status as the main global reserve currency will soon end; and the dollar will sharply weaken over time.
Roubini argued and pointed out that some of the policies that Trump announced warrant such pessimism. Tariffs, protectionism, and trade wars are likely to be stagflationary (causing higher inflation and lower growth), as are draconian restrictions on migration, mass deportations of undocumented workers, large unfunded fiscal deficits, and efforts to interfere with the US Federal Reserve’s independence. Equally, the US economy would not be well served by a Mar-a-Lago Accord to weaken the dollar, further damage to the rule of law at home and abroad, or tighter restrictions on foreign talent – scientists and students – coming to the United States.

Nonetheless, Roubini maintained (since right after Trump’s election) that the US economy will do fine – not because of Trump’s policies, but in spite of them.

For starters, Roubini argued that a combination of market discipline, Trump’s more sensible advisers, and Fed independence to prevail, and that is what has happened. Trump has consistently chickened out and pursued trade deals, rather than following through with his very high Liberation Day tariffs.

Trump’s default may be “TALO” (Trump Always Lashes Out), but bond vigilantes and financial markets have pushed him into TACO (Trump Always Chickens Out) mode.

As his most damaging economic policies have taken a milder form, Roubini argued that the US economy will still endure some pain, but the likely 2025 end-of-year scenario is a growth recession (meaning below-potential growth), but not the outright recession (typically defined as two consecutive quarters of negative growth) that the consensus predicted after the Liberation Day tariffs.