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Wells Fargo Economists Say '08 Recession Unlikely

SAN FRANCISCO-The prediction, of an "economic slowdown" as opposed to a recession, comes during the company's annual economic forecast teleconference last week.

By Brian K. Miller | Updated on December 25, 2007

SAN FRANCISCO-The housing slump and the roiled debt markets will result in an “economic slowdown” in 2008 but it won’t be enough to qualify as a full-blown recession. That’s that expectation of Wells Fargo senior economists speaking during the company’s annual economic forecast teleconference last week.

“Healthy export growth and continued business spending will help the economy steer clear of an outright recession, but I believe that won’t be significant enough to prevent an economic slowdown in 2008,” said Scott Anderson, who holds a doctorate in economics with an emphasis in monetary theory and international trade and finance. “Rapidly cooling earnings growth and rising economic uncertainty will make US companies reluctant to undertake ambitious expansion plans in 2008.”

In further explaining the optimism, the company’s chief investment strategist Jim Paulsen said the stock market is within 5% of all-time highs and eight out of the 10 economic sectors in the S&P 500 are up 6% or better, which has given a 4% bond yield. In addition, he said more than 95% of people in the US who want to have a job have one and they’re still spending.

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