US market overpriced? This Harvard economist thinks so

Even if the U.S. and China weren’t engaged in what some say is tantamount to an international trade war, the American economy would likely still be struggling to grow, according to famed American economist Martin Feldstein.

Continue Reading Below

“I would be nervous about buying,” the Harvard professor said during an interview with FOX Business’ Stuart Varney on Tuesday. “Even if we weren’t dueling with the Chinese.”

Feldstein cited years of “super-low interest rates,” which have buoyed stock prices way above any previous price-earnings ratio.

Although U.S. stocks fell sharply on Tuesday -- largely because of traders reacting to another round of tariffs imposed on Chinese goods -- Feldstein warned the market is currently overpriced.

In early June, U.S. inflation accelerated to a 6-year high. In hopes of combating that, the Federal Reserve has planned for several gradual interest rate hikes this year.