Tags: Nobel Prize winner Lars Peter Hansen | sluggish | economic | recovery

Nobel Laureate Hansen: US Suffering 'Stunningly Sluggish Recovery'

Thursday, 21 Aug 2014 03:23 PM

By Dan Weil

Nobel laureate economist Lars Peter Hansen, a professor at the University of Chicago, isn't too impressed with the economy's rebound from the 2007-09 recession.

GDP has grown at an annual rate of only 2.2 percent since then, marking one of the slowest recoveries in U.S. history.

"It has been a stunningly sluggish recovery from this recession," Hansen told CNBC.

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"I really think in the U.S. at least there has been too much attention devoted to monetary policy as the key to fixing up problems. Going forward, I think the challenges we face in financial-market oversight uncertainties are potentially much more critical."

Regulatory uncertainty is creating caution in the economy, Hansen said. "I think clarity in policy is really critical in terms of getting investment stronger."

Others think monetary policy has been overemphasized too.

In a recent Wall Street Journal survey, 30 economists voice concern that the Fed will wait too long to hike rates, and just three are worried the Fed will act too soon.

The Fed has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.

"They are making me nervous," Arun Raha, chief global economist for industrial manufacturer Eaton Corp., told The Wall Street Journal.

"Given the strength of the job market, manufacturing and non-residential construction, it's about time they got rid of their low-rates-for-an-extended-period viewpoint."

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