Stiglitz: US recession ‘nowhere near end’

Nobel Prize-winning economist Joseph E. Stiglitz said the U.S. recession is “nowhere near” an end and the economy’s third-quarter growth rate of 3.5 percent, the first expansion in more than a year, won’t carry into 2010.

While last week’s figures on gross domestic product are “very good,” the numbers would be “miserable” without stimulus measures enacted by the Obama administration, Stiglitz said on Saturday at a forum in Shanghai. He urged the U.S. and other countries not to pull back on efforts to shore up economies.

“When we look at if workers can get jobs, if they can work full time, if businesses are able to sell goods they produce, in those terms, we are nowhere near the end of recession” in the U.S., said Stiglitz, 66, the former chief economist at the World Bank. The U.S. job market is still “in very bad shape.”

Federal assistance to the housing and auto industries helped propel growth in the July-September quarter. President Barack Obama, in his weekly radio address to the nation on Saturday, called the Oct. 29 report on GDP a “good sign” and said an expanding economy is the first step to job creation.

While most economists estimate the recession has ended, the National Bureau of Economic Research is responsible for determining when contractions begin and end. The organization usually makes its recession pronouncement as long as a year and a half after the fact. The group defines a recession as a “significant” decrease in activity over a sustained period of time. The declines it measures would be visible in gross domestic product, payrolls, production, sales and incomes.

The U.S. unemployment rate reached a 26-year high of 9.8 percent in September and economists project it will exceed 10 percent by early 2010.

“The unemployment rate is likely to go up,” Stiglitz told reporters. “Growth won’t be fast enough to bring down the unemployment rate.”

Stiglitz said the growth rate of 3 percent to 3.5 percent needed to create enough jobs for new U.S. labor market entrants was unlikely to be sustained into next year.

It is too early for the U.S. and other countries to begin easing stimulus measures put in place a year ago to avert a financial market meltdown, Stiglitz said.

“For the world as a whole, it’s premature to think about exiting stimulus,” he said in Shanghai.