The Source @ AXA Equitable

Outlook in Four Words: Europe, Housing, Jobs, Politics

Posted December 23rd, 2011 at 8:23 AM EST

News Brief from AXA Equitable: Highlights from recent notable market news reports
December 23, 2011

Economists expect U.S. GDP will grow a modest 2% in 2012, only slightly higher than the 1.7% rate expected for 2011, citing issues related to Europe, housing, jobs, and government spending cuts (“Risks Cloud Outlook for Economy in 2012,” by Conor Dougherty, Dec. 23, 2011, The Wall Street Journal).

The Journal’s survey of economists found that most respondents expect a mild Europe recession to hurt U.S. exports, persistent foreclosures to depress home values, job growth to be too weak, and government spending cuts – and related political wrangling – to further drag down growth.

“We know the global economy is going to slow,” Nariman Behravesh of IHS Global Insight told The Journal. “The question is by how much.”

Mohamed El-Erian of Pimco paints an even gloomier picture (“Pimco’s El-Erian Sees Risk Europe May Spark Lehman-Like Crisis,” by Rich Miller, Dec. 20, 2011, Bloomberg).

El-Erian, head of the world’s biggest bond fund, told Bloomberg the euro zone has a 1 in 3 chance of breaking apart and sparking a 2008-style financial meltdown. “It would be the equivalent of a sudden stop” in which financial markets seized up, El-Erian said, adding that the more likely scenario is that the euro currency union slims down.

El-Erian said he thinks nine of the current 17 countries would remain in the union – Austria, Belgium, Finland, France, Germany, Italy, Luxembourg, the Netherlands and Spain.

IMPORTANT — AXA Equitable, AXA Advisors, LLC (member SIPC) and their affiliates do not provide tax/legal advice, or investment or market research. The quotes provided in this News Brief have been excerpted from media reports for general informational purposes only and do not represent the opinions of AXA Equitable, AXA Advisors or their affiliates, associates or employees. AXA Equitable and its affiliates make no representation as to the accuracy or completeness of any statements, statistics, data, opinions, forecasts, or predictions provided herein, nor will this information necessarily be updated or supplemented at any time. Any reference to market or index performance is for informational purposes only. It is not possible to invest directly in an index. This material is not intended, and should not be relied upon, as investment or financial advice and does not constitute an offer or solicitation of any kind.

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