LJUBLJANA - Unemployment in the United States will peak only in early 2011 because of a slow and painful recovery from the global economic crisis, Nobel Prize-winning economist Paul Krugman said on Wednesday.

He said the global economy seems to be stabilizing at a level that is unacceptably poor and added it is possible that the recession will be a double-dip one.

(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.

The U.S. unemployment rate jumped to a 26-year high of 9.7 percent in August, according to U.S. Labor Department data.

Krugman, who received a Nobel Prize for economics in 2008, said the acute phase of the global crisis had passed but the recovery is likely to feel like a continuing recession.

He said 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, adding 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.

The Princeton professor and New York Times columnist said most economies should have more aggressive stimulus programs than seen so far and added rising budget deficits had saved the world from a replay of the Great Depression of the 1930s.

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.

(Reporting by Marja Novak; Editing by James Dalgleish)

Unemployment