Positive:
Goldman Sachs Group Inc. Chief Economist Jim O’Neill "Many countries will be “surprising” in their economic growth in 2010, he said, while adding that there is potential for more “positive surprises” that could help fuel global expansion."
Negative:
Stiglitz Says Markets ‘Irrationally Exuberant’ About Recovery
Oct. 6 (Bloomberg) -- Nobel Prize-winning economist Joseph Stiglitz said U.S. unemployment will keep rising and should be the focus for policy makers, and gains in the stock market show investors have been “irrationally exuberant” about a recovery.
“There’s a lot of risk going ahead of some big bumps,” he said yesterday in a Bloomberg Television interview from Istanbul, citing housing, commercial real estate and consumers’ inability to pay off credit cards because of job losses. “There’s a very big risk that markets have been irrationally exuberant.”
His comments echo New York University Professor Nouriel Roubini’s view that “markets have gone up too much, too soon, too fast,” and billionaire George Soros, who warned yesterday that America’s economic recovery will be “very slow.”
The U.S. has lost 7.2 million jobs since the recession began in December 2007, and the unemployment rate reached a 26- year high in September, a Labor Department report last week showed. Joblessness is likely to reach 10 percent by the end of the year, according to economists surveyed by Bloomberg News last month.
It’s “pretty clear that the situation will continue to get worse,” Stiglitz said, citing elements of the jobs report such as the number of people who can’t find a full-time job and the pace at which Americans are dropping out of the labor force.
‘Well Short’
Economic growth this year and next will “fall well short of what we need to stop unemployment from growing,” he said. The likelihood that the U.S. economy will be “out of the woods” before most of the measures in the Obama administration’s stimulus package expire in 2011 is “very small,” he added.
Soros said in Istanbul that U.S. consumers are “overdebted” and that the “bankrupt” American banking system will hamper thee economy. “The United States has a long way to go,” he said.
Roubini, who accurately predicted the financial crisis, warned in an Oct. 3 interview in Istanbul of “the risk of a correction, especially when the markets now realize that the recovery is not rapid and V-shaped, but more like U-shaped.”
That may be “in the fourth quarter or the first quarter of next year,” he said.
U.S. employers cut 263,000 workers from payrolls in September, while the jobless rate rose to 9.8 percent from 9.7 percent the prior month, the Labor Department said Oct. 2.
In a separate Bloomberg Television interview yesterday, Goldman Sachs Group Inc. Chief Economist Jim O’Neill said the International Monetary Fund meetings in Istanbul are “stuck” in an outdated mentality that doesn’t reflect the rising power of emerging economies following the global financial crisis.
O’Neill also said the dollar probably isn’t the No. 1 concern for U.S. policy makers, and predicted 4.1 percent growth for the global economy next year.
Many countries will be “surprising” in their economic growth in 2010, he said, while adding that there is potential for more “positive surprises” that could help fuel global expansion.
