Economy's 'Dr. Doom' looks to bright side

Nouriel Roubini, one of the few people to predict the collapse of 2008, long ago morphed from respected economist to global celebrity. In 2009, GQ magazine named him its Oracle of the Year. Last year, Oliver Stone cast Mr. Roubini in the movie “Wall Street: Money Never Sleeps.” Sticking close to type, Mr. Roubini played a TV pundit who gravely warned: “If the government doesn't get involved, there is a risk of a global meltdown of the global financial system.” And Wall Street, meanwhile, has conferred on him its highest honor for un-fettered gloominess: the title “Dr. Doom.” Now Mr. Roubini is trying to pull off his toughest feat yet. He is betting that clients of his business — Roubini Global Economics LLC — will continue to pay him up to $100,000 a year for the intellectual rigor of his prognostications, not for his relentless negativity. “I'm not a perma-bear,” he said during an interview in his sun-filled Greenwich Village office. “There is a global economic recovery. There are a number of positives,” Mr. Roubini said. Although that is true, the fact is that his attempted shift to the bright side is one that many market Cassandras have tried but few have ever pulled off. Elaine Garzarelli, a strategist at Shearson Lehman Brothers Holdings Inc. who accurately predicted the 1987 stock market crash, lost much of her audience when she turned more optimistic, for instance. Albert Wojnilower is another one. In the 1970s, the First Boston Corp. economist achieved fame as Wall Street's “Dr. Gloom,” whose pronouncements could move markets. Then, his dire warnings about the impact of rising interest rates on stock prices packed as much of a wallop among investors as Mr. Roubini's pronouncements do today. But as Mr. Wojnilower became more optimistic in the 1980s, his phone rang less often. “It's like you're a singer and expected to perform a song a certain way,” said Mr. Wojnilower, who is 81 and writes a quarterly letter analyzing markets for a mere handful of people. “I have high regard for Nouriel Roubini, but if he suddenly stopped being so bearish, he'd lose clients.” Mr. Roubini, 52, is undeterred. “Day by day, you've got to be getting it right,” he said. “The only way to maintain clients is not to stick to your view but to see how things are changing.” By one measure at least, change may already be taking a toll on Mr. Roubini's audience. As of Feb. 13, Google searches for Mr. Roubini's name were 50% below September's level and 75% below May's, according to research firm Insider Monkey, which has tracked his popularity for several years. “Actually, Roubini was 10 times more popular during the fall of 2008 than he is now,” Insider Monkey concluded in a recent report. Still, for the moment, business appears strong at Roubini Global Economics. Since its launch in 2005, it has grown to nearly 100 employees, including 70 staff members in New York who work on the trading floor of a defunct Wall Street firm. The firm's first paying client was the chief economist of the hedge fund headed by the famously pessimistic George Soros. Today, Roubini Global Economics boasts 1,100 clients, including banks, money management firms and policymaking bodies. “Pick a bank, pick a hedge fund — they're probably a client,” said former Roubini Global Economics chief executive Camille LeBlanc, who is still a board member. Big-spending customers get face time with the busy Mr. Roubini, who provides them with what he calls “direct access.” This month, he plans to spend three weeks traveling to Asia, Europe and the Middle East to meet them, though he hopes to squeeze in some time to browse galleries with an eye toward building his contemporary-art collection. To reward existing clients who can't afford the personal treatment, and to recruit new ones, Mr. Roubini regularly hosts conferences at his firm's office. At one such event recently that focused on the Middle East, he lingered for an hour and a half afterward to shake hands and chat with the 100 attendees who wanted to get close to the person that they have seen so often on CNBC. In that department, Mr. Roubini is still in as much demand as ever, appearing on TV or other media 46 times through the first 54 days of this year, according to the blog Economic Doom. But he increasingly is leaving economic doom behind. In Mr. Roubini's 2011 economic outlook, published in December, he proclaimed that the risk of a double-dip recession in the United States is “much lower than before” and predicted that inflation will remain low “for quite some time.” He even forecast economic growth of about 3%, though he did caution that such a modest pace of expansion won't be enough to lower unemployment. As part of his move toward the light, last year Mr. Roubini did something that many well-heeled New Yorkers are putting off: He bought an expensive condominium. His December purchase of a 3,600-square foot Manhattan triplex penthouse even sparked a flood of news stories. “Economic doomsayer Nouriel Roubini buys $5M party penthouse,” read one headline on Curbed.com. He was quick, however, to caution that his investment in Manhattan property shouldn't be read as an endorsement of the idea that real estate prices have bottomed. Instead, Mr. Roubini warned that there is still a glut of supply on the island, and he pointed out that the property he bought had been on the market for two years and the seller had cut the asking price by 35%. The good news for him is that he may yet be able to put his “Dr. Doom” hat on again. Dark clouds are massing on the economic horizon. With unrest in the Middle East sending oil prices spiking upward and rattling markets worldwide, Mr. Roubini appears to be getting back in touch with his bearish side. In a report last month, he dourly reminded people that three of the past five global recessions were preceded by political crises in the Middle East that triggered big run-ups in energy costs. The transformation of “Dr. Doom” may have to wait. Aaron Elstein is a reporter at sister publication Crain's New York Business.