Nobel Prize-winning economist Joseph Stiglitz said US unemployment will keep rising and should be the focus for policy makers, and gains in the stock market show investors have been “irrationally exuberant” about a recovery.

“There’s a lot of risk going ahead of some big bumps,” he said in a Bloomberg Television interview Monday from Istanbul, citing housing, commercial real estate and consumers’ inability to pay off credit cards because of job losses. “There’s a very big risk that markets have been irrationally exuberant.”

His comments echo New York University Professor Nouriel Roubini’s view that “markets have gone up too much, too soon, too fast,” and billionaire George Soros, who warned that America’s economic recovery will be “very slow.”

The US 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.

It’s “pretty clear that the situation will continue to get worse,” Stiglitz said, citing elements of the jobs report such as the number of people who can’t find a full-time job and the pace at which Americans are dropping out of the labor force.

Economic growth this year and next will “fall well short of what we need to stop unemployment from growing,” he said. The likelihood that the US economy will be “out of the woods” before most of the measures in the Obama administration’s stimulus package expire in 2011 is “very small,” he added.

Soros said in Istanbul that US consumers are “overdebted” and that the “bankrupt” American banking system will hamper the economy. “The United States has a long way to go,” he said.

Roubini, who accurately predicted the financial crisis, warned in an October 3 interview in Istanbul of “the risk of a correction, especially when the markets now realize that the recovery is not rapid and V-shaped, but more like U-shaped.”

That may be “in the fourth quarter or the first quarter of next year,” he said.

US stocks may suffer a “major decline” after climbing to the highest levels in almost a year two weeks ago, according to technical analyst Robert Prechter, founder of Elliott Wave International Inc.

Stocks have surged around the world in the past six months as evidence mounts that the economy is emerging from its deepest recession since the 1930s. The Standard & Poor’s 500 Index has soared 51 percent from a 12-year low in March while Europe’s Dow Jones Stoxx 600 is up 48 percent. The euphoria contrasts with warnings from policy makers and investors like Soros.

US consumers are “overdebted” and the country’s banking system has been “basically bankrupt,” Soros said. “The United States has a long way to go.”

Group of Seven finance ministers and central bankers also struck a cautious tone after meeting on the shores of the Bosporus over the weekend, saying the prospects for growth “remain fragile.”

US and European stocks gained Monday after reports showed service industries expanded on both sides of the Atlantic.

“Stocks are very overvalued,” Prechter, who advised betting against US equities three months before the market peaked in October 2007, said in an October 1 telephone interview. “Stocks peaked in September and are back in a bear market.”

The S&P 500 will probably fall “substantially below” 676.53, the 12-year low reached on March 9, he said. His projection implies a drop of more than 34 percent from last week’s close of 1025.21. It rose to 1031.77 at 10:05 a.m. in New York.

Gains in the index have pushed valuations to more than 19 times reported operating profits from the past year, data compiled by Bloomberg show. That’s near the most expensive level since 2004.

US stocks fell last week after manufacturing expanded less than anticipated and unemployment climbed to a 26-year high of 9.8 percent. In the 16-nation euro region, the jobless rate is at 9.6 percent, the highest in more than a decade.

HSBC Holdings Plc chief executive officer Michael Geoghegan fears there will be a second global economic slump, the Financial Times reported today, citing an interview. Geoghegan forecast a W-shaped recovery and said the “reality is that profits will be quite reduced,” the newspaper reported.

The International Monetary Fund predicts the global economy will expand 3.1 percent in 2010, led by growth in Asia, after a 1.1-percent contraction this year. That is still “anemic” and “very weak,” Roubini said.

If growth doesn’t rebound rapidly, “eventually markets are going to flatten out and correct to valuations that are justified,” he said. “I see a growing gap between what markets are doing and the weaker real economic activities.”

The global equity rally has added about $20.1 trillion to the value of stocks worldwide since this year’s low on March 9. Governments have poured about $2 trillion of stimulus into the global economy while central banks have cut interest rates to close to zero in efforts to revive growth.

“In the short run we need monetary and fiscal stimulus to avoid another tipping point and to avoid deflation, but now this easy money has already started to create asset bubbles in equities, commodities, credit and emerging markets,” Roubini said. “For the sake of achieving growth stability again and avoiding deflation, we may be planting the seeds of the next cycle of financial instability.”