BlackRock’s Fink Sees Poor U.S. Fourth Quarter on Debt Talks

Laurence D. Fink, whose BlackRock Inc. is the largest shareholder in companies from Apple Inc. to General Electric Co., said the U.S. will have a “very poor” fourth quarter even if lawmakers reach a compromise and extend the nation’s borrowing authority.

“It will hurt retail sales and American CEOs in terms of how they deal with their quarter,” Fink, who is BlackRock’s chief executive officer, said today at the 2013 Institute of International Finance annual membership meeting in Washington. The political uncertainty, coupled with the focus of many CEOs on short-term results, means companies won’t invest in research, development and technology, said Fink, whose firm is the world’s largest money manager with $3.86 trillion in assets.

Consumer sentiment in the U.S. fell in October to a nine-month low, and jobless claims rose last week to the highest level in six months, reports this week showed, as the government’s partial shutdown and the debt-ceiling debate weighed on the world’s largest economy. House Speaker John Boehner yesterday proposed a short-term debt limit increase to postpone a potential U.S. default.

Failure by the world’s largest borrower to pay its debt -- unprecedented in modern history -- would devastate global markets, money managers including Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., have said.

‘Unacceptable Conversation’

“I think this is why it should be understood in this country by the men and women we put in our office that this is just an unacceptable conversation,” Fink said today.

The Thomson Reuters/University of Michigan preliminary consumer sentiment index decreased to 75.2 this month from 77.5 in September, a report today showed. Economists in a Bloomberg survey projected a drop to 75.3, according to the median estimate. Applications for unemployment benefits jumped by 66,000 in the week ended Oct. 5 to 374,000, the Labor Department said yesterday.

President Barack Obama and House Republican leaders are discussing a potential agreement even as Senate Majority Leader Harry Reid said he doesn’t like the idea of extending the deadline for a potential default. Reid said today he is open to hearing Republican proposals.

Job Creation

The most important thing countries need to focus on is job creation for the middle class as technology replaces workers who earn lower wages, said Fink.

“Everywhere in the world we are beginning to see a hollowing out of job creation,” he said. “I do believe it’s structural.”

BlackRock, co-founded in 1988 by Fink, 60, was largely a fixed-income manager until the mid-2000s. That’s when it acquired State Street Research & Management Co. and Merrill Lynch & Co.’s investment unit to add stocks and other assets. BlackRock’s 2009 purchase of Barclays Plc’s investment division gave it iShares, the world’s biggest provider of exchange-traded funds. As of January 2012, the firm held at least 5 percent of the shares of 2,400 companies worldwide.

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