In Joseph Stiglitz explains why the Fed shouldn't raise interest rates Los Angeles Times 08/27/2015, he writes:
Six years into a lackluster U.S. expansion, price growth for personal consumption expenditures — excluding food and energy — has averaged less than 1.5% annually in the recovery, well below the Fed's unofficial 2% inflation target. It slowed to 1.3% so far in 2015.In an interview with Jason Kirby (Joseph Stiglitz on why this stock market upheaval is so dangerous MacLean's 08/26/2015), he says of the US:
Global economic forces are poised to drive inflation still lower. Last week, oil prices fell to $42, a low not seen since February 2009. Europe's growth remains anemic and is likely to remain so: The IMF forecast for 2015 is just 1.5%. And while it is difficult to piece together a precise picture of what is happening in China, most experts see growth slowing markedly, with effects in other emerging markets.
With a weaker euro and yuan, our exports will decrease and our imports increase. Together, this will put pressure on domestic businesses and the job market, which is hardly robust.
... I’d say it’s not a strong recovery. The crisis was 2008, we’re now in 2015—eight years later after the recession and the gap between where we would have been and where we are is huge and not closing. That in some ways was expected, in that the defective response to the crisis lowered potential U.S. economic growth by leaving all these people unemployed. The implied unemployment rate is still very high. Labour force participation is very low, at something like a quarter century low. Not so much because of the aging population, but because of discouraged workers. And the increase in the wages in the second quarter was the lowest performance in 25 years. So overall, before this last turmoil, the U.S. economy was in better shape that Europe or Canada, but not strong. This turmoil will almost surely make things worse.In the LA Times piece, Stiglitz also comments on the role that quantitative easing can play in inflating bubbles:
The median family income in the U.S. is lower than it was a quarter century ago, and if people don’t have income, they can’t [consume], and you can’t have a strong economy. We had assumed it was the emerging markets that would keep the global economy going. With Europe weak, with our household income weak, it would be China and emerging markets. And what’s clear is that’s not true. There’s significant risk—actually it’s, no longer risk—a significant likelihood of a marked slowdown not only China, but also in a lot of other countries—Brazil, which is in recession, all of the other countries that depend on commodities, including Canada, are facing difficulties. So it’s hard to see a story of a strong U.S. economy.
After the 2008 crisis, the Fed tried to stimulate the economy by buying bank debt, mortgage-backed securities and Treasury assets directly from the market — so-called quantitative easing — which disproportionately benefited the rich. Data on wealth ownership show clearly that the portfolios of the rich are weighed more toward equity, and one of the main channels through which quantitative easing helped the economy was to increase equity prices.
So quantitative easing was yet another instance of failed trickle-down economics — by giving more to the rich, the Fed hoped that everyone would benefit. But so far, these policies have enriched the few without returning the economy to full employment or broadly shared income growth.