Yale Economist predicts US to face Dollar collapse, Double-Dip Recession

The latest wave of coronavirus has pushed the world’s largest economy the United States on the verge of a facing double dip-recession and dollar collapse.

These dire predictions were given by renowned economist Stephen Roach, despite positive reports over vaccine news.

“We have a vulnerable economy in the aftermath of the record collapse in the first quarter of this year, we have bounce back in the second quarter with a little momentum in the third quarter,” said Roach, a Yale University economist, while talking to CNBC.

“I think that with the infection rate still souring the US economy is still a vulnerable economy and is likely to experience further lockdown,” predicted Roach, however it would not be as severe as it experienced last spring.

Predicting the quarterly GDP growth, Roach said, “It is hard to predict a noisy number like quarterly GDP but I would think a moderate single-digit decline would not be surprising to me.”

Talking about the dollar decline, Roach, who had earlier served as Morgan Stanley Asia chairman said, “When I first came up with this seemingly out of consensus crazy view, I worried about the likelihood of a record current account deficit driven by a massive COVID-19 related budget deficits, and I think that is playing out even more dramatically then I first wrote about it in last May and June,” he said.

“Dollar is down about 12.5 percent now, and I think that this is just an early stages, when you have a current account deficit of the magnitude that we have and is deteriorating at such a rapid speed as is the case right now, one of two things happen interest rate goes up to stop to stop the fall or the currency goes down.

“The Fed is not signaling any possibility of a rate hike the pressure on the dollar is likely to be even more intense as a result,” he said, while adding that the US need fiscal relief to address this “really difficult economic situation.”

Back in June, Roach forecasted calls a 35pc drop in dollar drop against other major currencies between now and the end of 2021.

“We are going to go in the hole on our savings more than we ever have in history,” Roach said.