Economist Joseph Stiglitz fears for ‘W’ shaped recession in US

| September 8, 2009 | 0 Comments
Economist Joseph Stiglitz fears for ‘W’ shaped recession in US

Despite recent signs of an imminent recovery within the US, Nobel Prize-winning economist Joseph Stiglitz has expressed his concern for a “double-dip” recession in the world’s largest economy.

Mr Stiglitz, who said he has been consulted on an informal basis by the Obama Administration to discuss economic issues, said “the prospects of a robust recovery are very, very weak”.

Mr Stiglitz, who is also a former World Bank chief economist, said there was a “significant chance” that the economy could shrink again after a period of low growth.

In his gloomy assessment, he also said: “It is not possible to predict whether we have a malaise or a W (shaped growth pattern). But there is a significant chance of a W.”

“We are not seeing a recovery of sustained consumption,” Stiglitz added.

He believes that the “withdrawal of stimulus packages in 2011 will be a negative shock to the economy,” and highlighted the continuing risks in the commercial property sector.

Mr Stiglitz’s comments come after signs that the US economy is emerging from the worst recession in several decades due to a levelling out in consumer spending and stability within the housing market and manufacturing sector.

Furthermore, minutes from the latest Federal Reserve meeting said that, in general, US policymakers were optimistic that the downturn is coming to an end.

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