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Roubini Declares No AI Bubble, Warns of Modest Growth Gains

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  Published in Business and Finance on Tuesday, November 25th 2025 at 15:58 GMT by Fortune

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Dr. Doom Nouriel Roubini Says No AI Bubble, Growth Recession, and the End of American Exceptionalism

Nouriel Roubini – the Harvard economics professor who famously predicted the 2008 financial crisis – is back in the headlines, this time as a warning voice on the future of the U.S. economy, global growth, and the hype surrounding artificial intelligence. In a recent Fortune interview, Roubini (often dubbed “Dr. Doom”) argues that the so‑called “AI boom” is not a bubble, that the world is heading into a prolonged growth recession, and that the United States can no longer rely on the myth of American exceptionalism to drive prosperity.

1. The “No AI Bubble” Thesis

Roubini starts by acknowledging the tremendous advances in AI over the last decade. “We are at the beginning of a new era,” he says, “but the market has exaggerated the financial upside.” He distinguishes between the technology’s transformative power and the speculative price tags that have accumulated around AI start‑ups and the stocks of firms that claim to be “AI‑first.”

Key points of the AI assessment

Roubini cites research from the National Bureau of Economic Research (NBER) that shows the bulk of AI’s impact will be incremental, not revolutionary. He also points to the current “AI frenzy” in venture capital, arguing that valuations of AI companies are now comparable to those of pre‑Dot‑com era tech firms, yet many of those valuations are not yet backed by earnings or sustainable business models.

“If you look at the fundamentals, AI is not a bubble. It is a long‑term, gradual shift,” Roubini says. “But the hype is creating a market that looks a lot like a bubble, and that is dangerous.”

2. A Prolonged Growth Recession

Roubini’s caution extends beyond AI into the broader macroeconomic environment. He warns that the United States and the world are moving toward a “growth recession” – a period where nominal GDP continues to rise but at a pace that is far below the level needed to support full employment, wage growth, and robust corporate profits.

Drivers of the slowdown

1. High Public Debt
   The U.S. public debt-to‑GDP ratio is projected to hit 130 % by 2030. Coupled with rising interest rates, this imposes a fiscal drag on growth.

2. Low Productivity Growth
   Technological progress has plateaued in many advanced economies. Roubini notes that U.S. productivity growth has been 0.7 % per year in the last decade, half of the 1.4 % seen in the 1980s.

3. Demographic Shifts
   The aging Baby Boomer cohort will strain public finances, while the smaller workforce of the next generation reduces labor input.

4. Yield Curve Concerns
   Roubini points to the flattening of the U.S. yield curve as a red flag, citing that a steepening curve is historically associated with an upcoming recession.

5. Geopolitical Tensions
   Trade friction with China and renewed tensions in the Middle East add an element of uncertainty that can suppress investment.

Implications

• Corporate Profits – With slower growth and higher borrowing costs, corporate earnings are likely to lag behind the cost of capital.
• Unemployment – Roubini warns that “the labor market may enter a quiet‑down period rather than a hard stall,” meaning that unemployment could rise gradually without the sharp spike seen in past recessions.
• Inflation – Despite high inflation in the past two years, Roubini predicts a potential “soft landing” where inflation eases as growth slows.

He also compares the current scenario to the 1970s stagflation, arguing that the U.S. will need to adjust its monetary policy stance more aggressively to curb inflation while not stifling the remaining growth engine.

3. The Myth of American Exceptionalism

Roubini challenges the long‑held belief that the United States will continue to dominate the global economy. While the U.S. still enjoys a leading position in technology, he suggests that other regions are catching up, eroding the “American advantage” that has underpinned policy arguments for decades.

Evidence of a shift

• China’s Innovation Growth – China’s GDP growth rate of 5.2 % in 2023, coupled with investment in AI research, is closing the productivity gap.
• European Resilience – The European Union’s investment in green technology and digital infrastructure is fostering a more diversified economic base.
• India’s Labor Market – With a 6.3 % population growth and a young workforce, India is poised to become a major consumer market.

Policy Implications

Roubini calls for a re‑imagined policy framework that moves away from “America first” rhetoric. He stresses the need for:

• Strategic Investment in Education – Upskilling workers to keep pace with automation.
• Infrastructure Upgrades – Particularly in broadband and green energy, to maintain competitiveness.
• International Cooperation – Sharing standards for AI safety and cybersecurity to mitigate a fragmented regulatory landscape.

He warns that failing to acknowledge this shift could leave the U.S. vulnerable to a “slow decline” rather than an explosive collapse. “American exceptionalism is a myth,” Roubini says, “and those who believe otherwise will see the country’s influence wane over the next decade.”

4. Policy Recommendations and Take‑Home Messages

Roubini offers a three‑pronged policy roadmap:

1. Monetary Policy Adjustments
   The Federal Reserve should consider a more forward‑looking approach to the yield curve, using quantitative tightening to pre‑empt inflation while protecting growth.

2. Fiscal Discipline
   A modest reduction in the debt‑to‑GDP ratio, achieved through targeted spending cuts and a modest tax adjustment, would free up fiscal space.

3. Strategic Investment in Human Capital
   Public and private investment in STEM education and lifelong learning would keep the U.S. workforce competitive in an AI‑driven world.

In his closing remarks, Roubini cautions: “The world is not going to double‑digit growth. That’s not a policy choice; that’s a structural reality. We must adjust our expectations, our policies, and our narrative about what it means to be a great economy.”

5. Conclusion

Nouriel Roubini’s Fortune interview is a sobering reminder that the narrative of relentless U.S. growth and boundless AI potential is a simplification. His argument that the AI boom is not a bubble underscores that while the technology will continue to transform, its impact on the macroeconomy will be measured. The impending growth recession, driven by debt, low productivity, and demographic challenges, suggests a slower path to prosperity. Finally, the erosion of American exceptionalism is a call for humility, strategic foresight, and a recalibration of U.S. economic policy to keep pace with a rapidly evolving global landscape.

Readers and policymakers alike should take Roubini’s warnings seriously, using them to shape a realistic, resilient strategy for the coming decade.