U.S. economist Joseph Stiglitz, winner of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, speaks during an interview with AFP in Geneva on March 16, 2026.
The war in the Middle East has put the United States at high risk of falling into stagflation, Nobel Prize-winning economist Joseph Stiglitz has said.
Even before the war erupted on Feb. 28 with a barrage of U.S. and Israeli strikes on Iran, Stiglitz said the U.S. economy was already "close to stagflation" — a troublesome blend of high inflation and anaemic growth.
There were a number of "readings for slow growth before the war", he said in an interview on March 16 "and this just... pushes us over the brink."
Stiglitz, who jointly won the Nobel Economics Prize in 2001, said the U.S. was the country most at risk of falling into stagflation, as it did during the oil shocks in the 1970s.
"The risk of stagflation seems to be quite high for the U.S.," he said.
The situation elsewhere was not as clear-cut, according to Stiglitz.
While Europe would certainly face inflationary pressures on energy too, it was also seeing a growth "stimulus" as it dramatically ramps up defense spending, after Washington "made it very clear that you cannot depend on the U.S. for your defense", he said.
Trump's policies had meanwhile significantly weakened the U.S. economy even before the war, he maintained.
Stiglitz pointed to troubling indicators, like the lack of labor force growth in 2025 and last month's hike in unemployment.
And while there had been growth, it had been "unbalanced," he said, with around a third coming from the creation of artificial intelligence data centers.
The stock market, meanwhile, "is doing well because it's dominated by AI and tech firms", he said.
"If you look at the rest of the stock market, it's just languishing."
At the same time, Stiglitz said he expected to see Trump's tariff policy boost inflation.
