US economist warns country needs 'miracle' to avoid recession

The negative economic growth in the first half year in the US could last into 2024 leading to a deeper downturn, US economist Stephen Roach said on CNBC on Monday.

Roach, a Yale University senior fellow and former Federal Reserve economist, who served as chair of Morgan Stanley Asia, noted that the US needs a "miracle" to avoid a recession.

"We'll definitely have a recession as the lagged impacts of this major monetary tightening start to kick in," he said. "They haven't kicked in at all right now".

Roach suggested that Fed Chair Jerome Powell had no choice but to take a Paul Volcker approach to tightening, and predicted the unemployment rate, which is 3.5 percent now, is bound to start climbing.

"We're going to have to have a cumulative drop in the economy (GDP) somewhere of around 1.5 to two percent. And, the unemployment rate is going to have to go up by one to two percentage points in a minimum," said Roach.

The US central bank's chief, Jerome Powell, also warned on Friday that Americans might have a tough time due to slow economic growth and possible rising unemployment rate as the Federal Reserve raises interest rates to fight high inflation, according to Reuters.

Yet Nobel Prize-winning economist Richard Thaler argued the US economy was showing more signs of strength than weakness. Thaler said earlier on CNBC that the US looks like a strong economy and he sees nothing that resembles a recession with a record low unemployment.