Economist Roubini Nouriel sees core inflation hitting 3.5% in H2, warns of possible recession

Economist Nouriel Roubini told CNBC that he expects core inflation in the United States to climb to 3.5% by the end of 2025.

He said the second half of the year will bring weaker growth and possibly even a recession, while interest rate cuts from the Federal Reserve won’t happen before December.

Roubini said the economic slowdown will look like a “mini stagflationary shock” and warned that inflation is still running too hot for the Fed to pivot.

The Fed’s preferred inflation measure, the core personal consumption expenditures index, remains stubborn. Roubini believes it will stay well above target, which keeps the Fed stuck. Growth slowing while inflation remains high is a setup he’s seen before.

The economist also said he expects global trade talks to cool off, but not in a way that avoids economic damage. He predicted a “mild” outcome where many countries end up slapped with 15% tariffs.

Fed stands still as economy slows and trade tariffs linger

When asked about possible market fallout, Roubini said he doesn’t think the US is headed for another April 2 moment. That date, in 2025, saw President Donald Trump announce aggressive tariffs that triggered a 20% market drop. Roubini said, “I’m not expecting, certainly, anything close to April 2.” But the warning still stands. He made it clear the economic path is narrowing, and the Fed has limited room to act.

Roubini earned his nickname “Dr. Doom” for predicting the 2008 crash and the 2020 virus-induced recession early. While his accuracy isn’t flawless, his timing on those calls made him hard to ignore. He’s spent years in academia, government, and private investing, and he’s currently a portfolio manager at the Atlas America Fund (USAF), an ETF launched late last year.

That fund was built to shield investors from threats like inflation, economic shocks, and climate instability. Despite being small, just $17 million in assets as of now, the fund has held up under pressure. Since launching in November, USAF has gained more than 5%, even though that trails the S&P 500.

When the stock market fell apart after April’s tariff news, USAF only dropped under 3%, showing some defense against broader turmoil.

Roubini said the goal of the fund isn’t to chase big wins. “It’s not a portfolio for doomsday,” he explained. The fund is built for people who expect slow-moving, long-term instability instead of sudden collapses. It’s trying to stay steady, not spectacular.

Atlas America Fund adds gold, cuts real estate, eyes inflation

Puneet Agarwal, another manager at USAF, said their focus is on steady returns. “We don’t particularly want outsized returns in one month. We’d rather have the slow and steady uptick, which is exactly what we’ve been seeing,” he said.

The ETF holds a mix of gold, short-term US government debt, and agricultural commodities. That lineup has helped at times, but also slowed performance during calmer months like June.

Since launch, the portfolio has shifted. USAF recently added more exposure to cybersecurity and defense technology. They also bought short-term inflation-protected bonds and reduced their stake in real estate. The bet on gold gave the fund an edge earlier this year, but became a drag in recent weeks. Still, it reflects a bigger idea Roubini has been pushing.

He believes the global economy is slowly drifting away from the US dollar, and investors are starting to prepare for that. “We’re not expecting things to crash. But the trend is clear and it is going [in] one direction,” he said.

That direction, according to Roubini, includes elevated inflation, slower growth, geopolitical uncertainty, and tighter financial conditions worldwide.