http://www.bloomberg.com/apps/news?pid=20601068&sid=a_ZdUBXgQfTM Stiglitz Says Markets âIrrationally Exuberantâ (Update1) Share | Email | Print | A A A By Jeremy Torobin Oct. 5 (Bloomberg) -- Nobel Prize-winning economist Joseph Stiglitz said unemployment is going to keep rising and should be the main focus for policy makers, and that gains in the stock market indicate investors have been âirrationally exuberantâ about a recovery. âThereâs a lot of risk going ahead of some big bumps,â he said today in a Bloomberg Television interview from Istanbul, citing housing, commercial real estate and consumersâ inability to pay off credit cards because of job losses. âThereâs a very big risk that markets have been irrationally exuberant.â The U.S. has lost 7.2 million jobs since the recession began in December 2007, and the unemployment rate reached a 26- year high in September, a Labor Department report last week showed. Joblessness is likely to reach 10 percent by the end of the year, according to economists surveyed by Bloomberg News last month. Itâs âpretty clear that the situation will continue to get worse,â Stiglitz said today, citing elements of the jobs report such as the number of people who canât find a full-time job and the pace at which Americans are dropping out of the labor force. âWell Shortâ Economic growth this year and next will âfall well short of what we need to stop unemployment from growing,â he said. The likelihood that the U.S. economy will be âout of the woodsâ before most of the measures in the Obama administrationâs stimulus package expire in 2011 is âvery small,â he also said. Employers cut 263,000 workers from payrolls in September, while the jobless rate rose to 9.8 percent from 9.7 percent the prior month, the Labor Department said Oct. 2. In a separate Bloomberg Television interview today, Goldman Sachs Group Inc. Chief Economist Jim OâNeill said the International Monetary Fund meetings in Istanbul are âstuckâ in an outdated mentality that doesnât reflect the rising power of emerging economies following the global financial crisis. OâNeill also said the dollar probably isnât the No. 1 concern for U.S. policy makers, and predicted 4.1 percent growth for the global economy next year. Many countries will be âsurprisingâ in their economic growth in 2010, he said, while adding that there is a potential for more âpositive surprisesâ that could help fuel global expansion. To contact the reporter on this story: Jeremy Torobin in Washington at jtorobin1@bloomberg.net Last Updated: October 5, 2009 14:01 EDT