The 2012 Financial Outlook
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While the last few years have been highlighted with record swings in market returns and widely oscillating economic data, we expect 2012 will be less about the fringes and more about the middle. While volatility is likely to remain elevated, the market and its economic backdrop may begin to migrate from the extremes – often times even polarized extremes – toward a more normalized period where investor sentiment, economic activity and the market’s direction start to move increasingly in alignment.
While moving away from the drastic extremes will be a welcome environment for whipsawed investors, the center offers its own distinct challenges and opportunities. The key hurdle for the market in 2012 will be finding the right balance. Recently we have experienced a market of extremes. In 2012, finding a middle ground, or Meeting in the Middle, is going to be key for growth in the markets and economy. Consumer sentiment, business leaders, policymakers and geopolitics are going to have significant impact on the investment environment. We believe that:
We expect the U.S.economy to grow about 2%, which is below the consensus forecast,while emerging markets post stronger growth and Europe experiences a mild recession. U.S. gross domestic product (GDP) is likely to produce below-average growth of about 2% in 2012, supported by solid business spending and modest, but stable, consumer spending. Read the full PDF.