Roubini's warning on the US economy in 2012

The recent failure of the US super committee to approve programs to help reduce deficit has not gone down well with the economists. Noted economist Nouriel Roubini is no exception to this. Roubini says that the political impasse will lead US into another major recession in 2012. He opines that if the measures to reduce US' debt burden of US$ 1.2 trillion are not extended, then it would lead to a 'fiscal drag'. This could amount to nearly US$ 350 bn on account of higher payroll taxes as well as higher burden on account of unemployment benefits. This amounts to nearly 2.3% of total US GDP (Gross Domestic Product). As a result, by doing simple math, if the US economy grows by 2% and the fiscal drag brings it down by 2.3%, then the growth is actually negative. And this drag would continue to spiral, thus making sure that the recession gets worse with each passing year. Therefore, it is high time that the US politicians get their act together and come up with logical and im plementable solutions to the problems. Otherwise, the world's largest economy will sink deep into recession.