'We're just going to get worse': 3 reasons Nobel economist Joseph Stiglitz thinks the US economy will keep weakening
Business Insider
February 20, 2026
AI-Generated Deep Dive Summary
Nobel Prize-winning economist Joseph Stiglitz has expressed concerns about the US economy's future, warning that it is likely to weaken further due to several pressing issues. In an interview with CNBC, he pointed to tariff-fueled inflation, declining manufacturing jobs, and uncertainty over interest rates as key factors contributing to his pessimistic outlook.
Stiglitz emphasized that tariffs imposed by President Donald Trump are particularly harmful to lower-income households. These taxes disproportionately affect the bottom 10% of US earners, reducing their disposable income by an estimated 3.5 percentage points in the short term. He described the situation as "regressive and distortive," highlighting how economic policies often burden those least able to afford them.
The manufacturing sector, a cornerstone of the US economy, has seen a steady decline in employment over the past two years. Despite Trump's claims that tariffs would revitalize American manufacturing, there is little evidence of recovery in broader employment data. Stiglitz pointed out the disconnect between policy promises and actual outcomes, noting the even sharper drop in blue-collar jobs as a cause for concern.
Another major issue, according to Stiglitz, is the push to lower interest rates. He expressed alarm at recent comments by Kevin Warsh, Trump's nominee for Fed Chair, who suggested that artificial intelligence could unlock productivity gains, justifying further rate cuts. Stiglitz warned that such reasoning is flawed and potentially dangerous, as it undermines the Fed's credibility and risks stoking inflation. Investors fear that premature rate reductions could lead to hotter inflation down the line.
Overall, Stiglitz's analysis underscores deeper structural problems in the US economy, even as GDP growth remains robust. His concerns highlight the need for careful policy consideration to avoid long-term economic instability. For businesses and consumers alike, these factors underscore the importance of staying vigilant as the economic landscape continues to evolve.
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Originally published on Business Insider on 2/20/2026