World recovery will look like a prolonged recession with unemployment rising

Addressing a business meeting in Slovenia on Wednesday Nobel Prize-winning economist Paul Krugman said that the unemployment in America will likely to be at its highest in 2011 and noted that while the worst of the crisis may have lapsed still the recovery will look like a long-time recession.

"(U.S.) unemployment will peak in early 2011 ... certainly staying very high and possibly rising all next year," Krugman told a business meeting in Slovenia, adding his forecast was based on data from previous U.S. economic crises.

Toughing upon the historical facts Krugman noted that recoveries have been weak from past crises in the United States and other regions as job sectors continued to get worse long after the crises have bottomed out. He said that the global job market will continue to get worse "well into 2011."

"We might have a double dip, that's a real possibility now for the world as a whole," said Krugman, saying the effects of stimulus programs will start to fade early next year and recovery will be slow due to the global nature of the crisis.

"What we should be doing is a lot more support for economies. Yes, deficits are a concern but so is a world economy which is probably operating 7 or 8 percent below capacity," Krugman said.

He also said governments should help people retain jobs, essential income, social services and health care.

One way to overcome the crisis might be to boost global investment in green technology and "get serious" about climate change as that could help sustain demand, he added.