US recovery prospect ‘very weak’

Nobel Prize-winning economist Joseph Stiglitz has cast doubt on the strength of any US economic recovery, warning it may be hit by a “double-dip” recession.

More positive economic data has convinced many analysts that the US is starting to improve.

But Mr Stiglitz, a former World Bank chief economist, said “the prospects of a robust recovery are very, very weak”.

He said there was a “significant chance” that the economy could contract again after a period of growth.

This is what economists refer to as a “double-dip” recession.

‘Negative shock’

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

He highlighted the fact that any recovery would be the result of government stimulus packages, which could not continue indefinitely.

“The withdrawal of stimulus packages in 2011 will be a negative shock to the economy,” he said.

He also highlighted continuing risks in the commercial property sector.

Recent data has suggested a more upbeat view of the US economy.

Last week, figures showed that US manufacturing grew in August for the first time in 19 months and that home sales hit a two-year high in July.

Last month, figures showed consumer spending continuing to rise and durable goods orders jumping sharply. –BBC News