Krugman Says No Signs of ‘V-Shaped’ Economic Recovery (Update1)
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By Dara Doyle and Louisa Nesbitt
June 5 (Bloomberg) -- Nobel Prize-winning economist Paul Krugman said the world’s economy is showing “not a hint” of a “V-shaped” recovery marked by a swift decline and revival.
The economy is “stabilizing, not recovering,” Krugman, an economics professor at Princeton University in New Jersey, said today at a conference in Dublin. “Things are getting worse more slowly.”
Data this month showed that the contraction in Europe’s manufacturing and service industries is easing and confidence in the economic outlook is rising. The U.S. lost fewer jobs in May than forecast, a report today showed. The International Monetary Fund says its forecast for global growth of 1.9 percent next year is based on the premise of a healthy financial system.
“We have made the transition from sheer panic to chronic anxiety,” Krugman said, adding he’s has a “hard time” seeing what might drive a “full” economic recovery.
U.S. payrolls fell by 345,000 in May, the smallest decrease in eight months, after a revised 504,000 loss in April, the Labor Department said today in Washington.
The U.S. policy response to the economic crisis has been “extraordinarily aggressive,” Krugman said. “Unfortunately, it hasn’t been enough.” The country will need “some form of new taxes” to bring down its deficit, he added.
Service industries in the U.S. shrank at a slower pace in May while job losses mounted, indicating that any economic recovery will be slow to develop.
“The euro zone, like the United States, I fear, could be facing kind of a lost decade,” Krugman said.
To contact the reporters on this story: Dara Doyle in Dublin at ddoyle1@bloomberg.net; Louisa Nesbitt in Dublin at lnesbitt@bloomberg.net
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I really want to see 240 and Benny spin this one.
