The U.S. economy will slow down in 2010, Goldman Sachs analyst Abby Joseph Cohen told CNBC.
“Next year, our GDP forecast is below consensus. Under normal post-recession conditions, we would be expecting GDP next year of 3-3.5 percent in 2010, but we have trimmed that number down to 2.5 percent because of continued concern about labor markets and household balance sheets which continue to de-lever,” she said.
Companies have built up their cash flow as profits have improved, she said.
“Many of them have been using their reasonably good profits over the last year or so, even as the recession was coming to an end, to rebuild their balance sheets,” she said.
“And those cash positions we think will be used for something in 2010.”
The S&P 500 is estimated to be between 1250 and 1300, the Goldman’s U.S. portfolio strategy team said.
“We’re seeing many consumers are coming back, but very importantly we’re seeing very good growth in exports but also in business investment, especially for equipment and things that enhance worker productivity. And we expect less pop from stimulus, but that’s still a good environment from the stock market,” Cohen said.
Robert Doll, Blackrock vice chairman, told CNBC that growth in 2010 will be lower than the typical for expansion and he expects it will “more grudging” than the past nine months of 2009. He estimates the S&P 500 will be at 1250.
Jack Bogle, founder of Vanguard, said on CNCB that will business and the GDP will be “pretty good” next year, but he is concerned about the deficit and unemployment rate.
Investors will be “fortunate” to see a flat market next year and expects the next decade to bring about 7-8 percent returns for stocks, he said.
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