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Analysts: Bullish Economic Outlook For Early '07

Tuesday, 5 Dec 2006 | 3:47 PM ET

In the markets right now--stocks are modestly higher -- after a U.S. Labor Department report showed wages and benefits increasing at a much slower pace in the 3Q than previously expected. That eases inflation worries.

Maria Bartiromo talked about the economic outlook with James Paulsen who is Chief Investment Strategist at Wells Capital Management and Sam Stovall- Chief Investment Strategist at Standard & Poor's.

Paulsen says "I’m in the camp that see the slowdown in housing and auto as something temporary - bottoming soon - and I think in the Spring growth will be back around 3% and that will cause the Fed to tighten rates."

Inflation Relief
Stocks are higher today as inflation worries continue to ease. James Paulsen, Wells Capital Management Chief Investment Strategist; Sam Stovall, S&P Chief Investment Strategist; and CNBC's Maria Bartiromo discuss how this plays out for the Fed and interest rates.

Paulson also says he still likes consumer cyclicals; the best things at the moment are the S&P industrials or the manufacturing stocks -- and he would emphasize the emerging markets and international markets.

Paulsen went on to say, those markets have greater growth rates than anywhere in the G7.

Stovall recommends seeking investment led growth in 2007.. as compared with consumer growth led growth in 2006. He expects the U.S. jobs report out later this week will show 100,000 to 110,000 new jobs and good growth over all.

He says the best way to get money on the sidelines back into the market is to work the market. He says the momentum is with the market. He likes what he sees; good earnings, a soft landing, contained inflation. Stovall’s expectation is for good earnings growth.. another 8% increase next year.

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  • With almost 30 years experience in business television, Bill Griffeth is co-anchor of the 3 p.m. ET hour of CNBC's "Closing Bell."

  • Kelly Evans

    Kelly Evans is an on-air correspondent, reporting across CNBC's business day programming. She is co-anchor of CNBC's "Squawk on the Street."