Edmund Phelps says we should wait 15 years before recovery

Columbia University professor Edmund Phelps, winner of the Nobel Prize in economics in 2006, said that US households will likely wait for about 15 years to rebuild wealth lost in the recession.

"The only way we're going to get a healthy, full recovery is over a long period of time, involving households rebuilding their balance sheets and companies in trouble rebalancing their balance sheets," Phelps said in an interview today with Bloomberg Television. "There's no silver bullet that's going to get us into good shape quickly."

A report released on June 11 by the Federal Reserve showed that the US household wealth dropped by $US1.3 trillion in the first quarter of this year while net worth for households and non- profit groups decreased to the lowest level since 2004. In the last quarter of 2008 wealth decreased by a record $US4.9 trillion.

According to Phelps recovery in the economy will be unlikely until producers exhaust their existing inventories. He also predicted that unemployment will become even at 7% level for the next three to five years.