BlackRock Inc.’s Laurence D. Fink, who heads the world’s largest asset manager, said he’s “very bullish” on the U.S. economy because corporations have strengthened balance sheets and lawmakers will probably agree on a deal to avoid automatic tax increases and spending cuts.
“Our corporations are in fabulous shape with $1.7 trillion in cash,” Fink, chief executive officer of New York-based BlackRock, said today in an interview with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s “Market Makers.” “I don’t believe you’re going to see that much default risk in the next few years.”
Fink said he’s optimistic that lawmakers will find a resolution next week to the fiscal cliff, a metaphor Federal Reserve Chairman Ben S. Bernanke used to refer to more than $600 billion in spending cuts and tax increases set to take effect in January if Congress doesn’t act.
Fink has said he’s bullish on the U.S. economy over the economic cycle because the country has a relatively strong banking system, the housing market is improving and a large supply of natural gas will create jobs. His optimism contrasts with a forecast by Pacific Investment Management Co., manager of the world’s largest mutual fund, which today said global growth will be hampered next year by a slowdown in the U.S.
Growth in the U.S. will drop to 1.25 to 1.75 percent in 2013 from 2.2 percent in the four quarters ended Sept. 30 because of “a policy mix of untimely fiscal tightening and increasingly ineffective monetary easing,” Saumil Parikh, a portfolio manager who leads Newport Beach, California-based Pimco’s cyclical forum, said in a December report posted on the firm’s website today.
Economists predict 2 percent growth for the U.S. in 2013 for the full year, according to the average of 79 responses in a Bloomberg survey.
A stalemate in Washington in the fiscal policy dispute probably would lead to a recession in the first half of 2013, according to the Congressional Budget Office.
President Barack Obama said yesterday he was ready to come to an agreement, and House Speaker John Boehner issued milder statements, signaling a potential thaw.
“I think we will find a solution,” Fink, whose firm manages $3.67 trillion in assets, said in the interview. “I actually believe that the Republicans understand I would say the nation’s consensus that we have to raise upper income taxes.”