The housing slump, high energy prices and tight credit markets are dragging down the U.S. economy but shouldn’t cause it to contract, Gary Schlossberg, a senior economist with Wells Capital Management, told a Denver audience Thursday.
“Economic growth is winding down,” Schlossberg said. “We don’t expect a recession.”
Foreign trade, for one, is shoring up the U.S. economy, Schlossberg told The Rotary Club of Denver.
U.S exports, driven by a weak dollar, hit a record $138.3 billion in August, the Commerce Department reported Thursday. Low inflation and low interest rates also continue to support consumer spending, despite declining home values.
Schlossberg predicts the Federal Reserve won’t cut interest rates when it meets Oct. 31 but that a quarter-point cut will come out of the Dec. 11 meeting.
Dean Junkans, chief investment officer for Wells Fargo Private Client Services, said investor sentiment has shifted from value stocks to growth stocks.
He recommended that investors overweight large-cap growth stocks, which tend to outperform large-cap value by 9.9 percent per year when the growth style of investing is in favor.
Value stocks had a seven-year run but for the past nine months have lagged.
