Economist Robert Shiller says the recent stock market gains may not last, and home prices will keep falling.
"The stock market, using price divided by a 10-year average of earnings, is about in the middle" of historical ranges, he told FT.com in a video interview.
Thus, "If you use the price-earnings ratio as a guide, we could expect returns similar to what we had in the past, which means things look fine," Shiller says.
"However, we can move beyond that. I'm thinking that unfortunately the world economic situation is precarious now, and I'm worried about this recession," he says.
"Even though at the moment it seems to be looking better, it's been a severe hit we've had in this crisis. I still see this as likely to be … a period of disappointing economic performance for some years."
As for U.S. home prices, they've been falling at a rate of about 2 percent a month, Shiller points out.
"Maybe the rate of decline has gone down a little bit, but it's still 2 percent a month," he says.
"That means that the adverse scenario that the stress test people have proposed looks about like the baseline," not the worst-case scenario.
Others, too, say that economic woes haven't disappeared.
A year from now, "the market will realize that potential growth for the United States is no longer 3 percent, but is 2 percent or under," Mohamed El-Erian, chief executive of money manager Pimco, told Bloomberg.
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