- Nobel laureate Joseph Stiglitz said in a Monday interview with Bloomberg Television that US unemployment is likely to remain elevated in the double-digits unless there is further government aid.
- “The uncertainty associated with the pandemic is not likely to go away,” Stiglitz said.
- Unless there is a vaccine developed soon — which he thinks is a low possibility — the uncertainty of the outbreak and devastation to households means that demand will stay depressed without further government aid, he said.
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The US is doomed to see prolonged unemployment in the double-digits without further government stimulus, according to Nobel laureate Joseph Stiglitz.
“We have a very weak labor market,” Stiglitz told Bloomberg television in a Monday interview, adding that the US is moving toward an unemployment rate of at least 25%.
That rate might abate naturally as some states reopen their economies following lockdowns to contain COVID-19. Still, unless there is more and better-targeted government support, “we won’t be back anywhere near to what we would normally say is a terrible level of, say, 10% to 12%,” he said.
The US unemployment rate tripled to 14.7% in April, the highest seen since the Great Depression, as employers lost a record 20.5 million jobs. In May, it’s expected that the rate will increase further as joblessness persists.
In addition, Stiglitz said that the $3 trillion the US government has already spent on coronavirus relief is a “poorly designed” program. Other countries abroad have spent less and avoided the same spike in unemployment, he said.
The only way out of the coronavirus-induced economic downturn in the next 24 months or so is adequate government support, Stiglitz said.
“The uncertainty associated with the pandemic is not likely to go away,” Stiglitz said. Unless there is a vaccine developed soon — which he thinks is a low possibility — the uncertainty of the outbreak and devastation to households means that demand will stay depressed without further government aid.