The euro zone is "very much" at risk of a recession and U.S. continues to struggle with a mediocre recovery, said Nobel Prize-winning economist Joseph Stiglitz, sounding the alarm on the deteriorating global economy.
If Europe were to enter a recession it would likely be "relatively minor," but persistent stagnation puts the single-currency bloc "on target for a lost decade," he said.
"To me, the problem is not whether [euro zone countries] are growing a little positive or negative, the real point is they are not back to where they should be," Stiglitz, a professor of economics at Columbia University, told CNBC on Friday.
Austerity is the wrong prescription for repairing the euro zone economy and underlies economic stagnation, he said.
"European leaders have consistently overestimated where the economy was going. Unfortunately, the leaders of Europe, in particular Germany, don't seem to recognize that austerity is one of the reasons Europe is doing so poorly," Stiglitz said.
That mediocre U.S. economy
There is a lot of slack in the U.S. economy, Stiglitz said.
"The U.S. has been moving along in this very mediocre way. What's remarkable is how low the growth is in spite of the fact that… we have some very strong positives," he said, referring to the country's huge discoveries of natural gas and thriving high-tech sector.