Tags: Goldman | Cohen | US | recession

Goldman's Cohen: U.S. Will Avoid Another Recession

Monday, 30 Apr 2012 02:22 PM

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The United States will avoid dipping back into a recession despite cooling economic growth rates, says Goldman Sachs chief equity strategist Abby Joseph Cohen.

The economy grew 2.2 percent in the first quarter, down from 3 percent in the fourth quarter and below expectations for a gain of 2.5 percent. That doesn't mean the economy is due to contract, Cohen says.

"All you need to believe is that we will avoid another recession over the next couple of years," Cohen tells CNBC. "And that is indeed our forecast, even though we see growth has slowed somewhat."

Editor's Note: Wall Street Insider: The System Is Rigged

In the meantime, investors should stick with equities thanks to low interest rates.

"It's hard for us to see how bonds can generate the same kind of returns going forward that they have over the last 30 years," Cohen says. "Equities seem to be very attractively valued."

The U.S. economy officially emerged from the recession in 2009 although high unemployment rates and sluggish growth make it feel for many the country never recovered in the first place.

Yet many, including Federal Reserve officials, remain wary the economy will fall off a dreaded fiscal cliff, a scenario expected to play out yearend when tax cuts expire and automatic spending cuts kick in, a combination that will suck hundreds of billions of dollars out of the U.S. economy.

It's up to the White House and Congress to act even in an election year.

"I have been disappointed that the president and Congress are not taking action until after the election," says St. Louis Fed President James Bullard, according to Reuters.

"I'm also worried that markets will react badly to the fiscal cliff at the end of this year. Markets might start to speculate about what might or might not happen."

Editor's Note: Wall Street Insider: The System Is Rigged

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