BlackRock's chief equity strategist Bob Doll remains resolutely positive on the US economy, predicting 2% GDP growth despite a new surge in double-dip fears.
He says the modestly positive economic data released last week, including a drop in jobless claims, a narrowing of the trade balance, and an increase in wholesale inventories confirms the recovery is intact.
"This helps reinforce our view that a slow economic growth environment is more likely to occur than is a double-dip recession," he says.
"There are, of course, some significant downside risks that could continue to weigh on economic growth, including ongoing consumer deleveraging, a still-troubled global financial system and a weak housing market. The labor market also remains depressed, but we have seen some signs of improvement.
"On balance, we expect the economy to muddle through over the next several quarters, and in our estimation, US gross domestic product growth should come in at around 2% for the near future."
Doll also says the completion of the mid-term elections in the US, which begin in two months' time, will be positive for markets as it will remove ongoing uncertainty.
"On average, US markets have gained 1.4% from September through the mid-term elections, but have climbed close to 15% in the six months following election day, a trend that suggests a possible tailwind for stocks in the months ahead," he says.
"Ultimately, stocks will break out of their current stalemate, either to the positive side or the negative. We are in the former camp, but acknowledge that investors will need to see clearer evidence that the double-dip scenario will not emerge before that can happen," Doll adds.
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