Vice chairman and global chief investment officer of equities Bob Doll says although economic news in the States has been mixed, consumer spending has remained reasonably sound “given the headwinds of the housing slump, mounting debt levels and depressed personal savings rates”.
He says: “In fact, last week it was reported that retail sales grew more than expected in September. Still, consumption growth appears to have downshifted over the longer term, and it seems that spending is being propped up by aggressive retail discounts, suggesting that the outlook for consumer spending remains mixed at best.”
Outside the United States, Doll says economic growth remains strong particularly in developing markets such as China.
He says: “This helps explain why emerging markets have been outperforming so dramatically lately. While the United States is far from the epicenter of this excitement, US stocks also are benefiting from this dynamic growth. The US economy could be a spoiler if it were to slide into recession, but that is not our mainline scenario. We believe continued positive US economic growth is the most likely outcome.”