Tags: goldman | oneill | economy

Goldman’s O'Neill: View the Economy as a Glass Half Full

Tuesday, 27 March 2012 08:07 AM

The global economy is in better shape than most people think, and investors would do well to view the world with a glass-half-full attitude, says Jim O'Neill, chairman at Goldman Sachs Asset Management.

The U.S. economy is recovering from the downturn, while not all European countries remained mired in the debt crisis.

"Generally speaking, cash is king; people are really reluctant and cautious," O'Neill tells CNBC.

Markets tend to shoot up and down on every economic indicator that hits the wire, which suggests many investors remain on the sidelines focusing too much on the short-term outlook, stocking up on cash instead of investing.

"At the core of it, everybody worries about the next quarter and, linked to it, the volatility of last year is what scared a lot of longer-term investors. It's tough for a lot of pension fund trustees to live through that," O'Neill says.

"I continue to see the world glass more half full than empty … on the account that the U.S. is on the way back, as it has been for some time."

Federal Reserve Chairman Ben Bernanke has said the economy needs to grow at a faster clip for unemployment rates to fall, as current hiring reflects companies refilling posts made vacant during recession-time layoffs, but new hiring for new business remains at bay.

"Further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," Bernanke told the National Association for Business Economics.

Markets interpreted those words as a hint the Fed will return to buy bonds from banks to pump up liquidity levels in the economy to spur more hiring.

"Reading between the lines, it sounds like he's pushing the ball forward toward having a discussion about doing more," says Chris Rupkey, economist at Bank of Tokyo-Mitsubishi, according to Reuters.

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Tuesday, 27 March 2012 08:07 AM
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