Krugman Says ‘End of the World Postponed’ as Economy Hit Bottom

By Kati Pohjanpalo
Sept. 21 (Bloomberg) -- The global economic downturn has probably hit bottom and the U.S. may have emerged from recession at the end of July or in August, said Paul Krugman, the Nobel Prize winning economist.
"The end of the world appears to have been postponed,"
Krugman, a professor at Princeton University, said at a seminar in Helsinki today. "We’ve had an extraordinarily terrible crisis" though "we’ve probably hit bottom" as "world output has turned positive."
The U.S. economy shrank 1 percent in the second quarter compared with the prior three months. The drop in GDP was the fourth in a row, the longest contraction since quarterly records began in 1947. The world’s largest economy has shrunk 3.9 percent since last year’s second quarter, making this the deepest recession since the Great Depression.
Krugman, who won the Nobel Prize in economics last year for his theories on world trade, said the U.S. has $1.1 trillion in annual capacity "staying idle."
The Nobel Laureate said the world has become "highly subject" to financial bubbles and its willingness to fail to recognize the bubbles was "remarkable."