Krugman: Economy Will Continue to Stagnate

Friday, 01 Jul 2011 12:00 AM

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The economy in 2011 will perform about as well as it did in 2010, meaning it won't double dip back into recession although it won't be strong either, says Nobel Prize winner in economics and New York Times columnist Paul Krugman.

"We'll start the year with 'We've turned the corner, recovery's on the way,' and end the year with 'If this is a recovery, it sure doesn't feel like a recovery,'" Krugman says, according to Canadian newspaper The Globe and Mail.

"I don't think we're going to have an actual double dip, though it's certainly not outside the realm of possibility," he said. "The U.S. economy will continue to stagnate."

krugman200.jpg
Paul Krugman
(Getty Images photo)
Focusing on Canada, Krugman says the U.S. neighbor to the north has a stronger balance sheet although liabilities are swelling.

"Household debt has risen at rates comparable to those in the U.S., but housing prices have not plunged, dot, dot, dot yet," Krugman says.

"So there's a real question of whether Canada is actually just a delayed version of the same story."

The U.S. economy grew 1.9 percent in the first quarter of this year, according to official government data.

Growth should pick up in the second half of the year, but it won't be strong.

"We're going to see improvement in the second half of the year, but I would not expect it to be stellar," says Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida, according to Bloomberg.

"We still have a bunch of headwinds for growth."

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