The U.S. economy will probably grow no more than 2 percent in 2011, less than what’s needed to lower unemployment, Nobel-prize winning economist Robert Mundell said.
“I don’t see economic growth as being any better than 2 percent,” the Columbia University economics professor said in an interview today on Bloomberg Television’s “Street Smarts” with Carol Massar. “You had this financial shock to the economy which devastated confidence, and there is nothing around the corner that looks like it’s going to be a strong push for the economy.”
The economy grew at an average 2.9 percent annual rate in the five quarters since the worst recession in seven decades ended in June 2009. That pace of recovery has lowered unemployment from a peak of 10.1 percent in October 2009 to 9.8 percent last month.
Mundell, 78, said the Fed’s unconventional monetary policy actions, known as quantitative easing, had the undesired effect of strengthening the dollar.
“The Fed policy was working three or four times before, but then it was cut off because the dollar soared and that’s what really broke the back of the economy,” he said. The Fed has been “negligent” in not taking into account the influence a rising dollar would have on the economy, he said.