Stiglitz: More Pain to Come

So much for green shoots, at least according to one Nobel-winning economist. Joseph Stiglitz said he sees a “significant chance” the economy could contract again after emerging from recession.

The Columbia University professor told reporters, “It’s not clear that the U.S. is recovering in a sustainable way,” Bloomberg reports.

Stiglitz said he sees the possibility that consumption in the U.S. could sag and private investment accelerates slowly. In other words, the economy would just sort of drag along as it has been doing for the past couple months or so.

The other possibility, Stiglitz says, is that government stimulus spending could jolt the economy to life for a little while, only to be followed by another dip once that money runs out, the so-called “W” shaped recovery.

“There’s a significant chance of a W, but I don’t think it’s inevitable,” he said, adding the economy, “could just bounce along the bottom.”

Meanwhile, more gloomy news about unemployment is expected today. The rate is expected to rise to 9.5 percent from 9.4 percent, according to a consensus estimate of 74 economists polled by Bloomberg.

“Given that we expect only modest economic growth in the initial phase of the recovery, it might not be until the second half of next year until payroll growth really begins to ramp up,” said Joseph Brusuelas, a director at Moody’s Economy.com, told Bloomberg.