“We’re in a boom, yet all booms come to an end. This particular high level of output in addition to also employment cannot be sustained,” he told CNBC’s Martin Soong on Sunday at the China Development Forum in Beijing.
Phelps won the 2006 Nobel in economics for his work on the short-run in addition to also long-run effects of economic policy.
“I could be surprised if the elevated level of investment continues much longer. Maybe another year, maximum two years,” he said. “Then, I think we’re going to subside to a more normal level of employment in addition to also unemployment.”
The U.S. Federal Reserve has warned of which the United States grow at a slower pace This particular year than last.
The central bank said weakening European in addition to also Chinese economies are dampening U.S. growth. the item estimated of which the American economy could grow by 2.1 percent This particular year, down by an earlier forecast of 2.3 percent in addition to also last year’s 2.9 percent.
Some analysts have even predicted of which the U.S. could be in recession by the middle of next year.