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2007: The Year the 'Cloud of Uncertainty' Lifts?

Will the new year bring new surprises? On CNBC's "Closing Bell," two market watchers revealed what they expect to see in the first weeks and months of 2007.

John Bitner, chief economist at Eastern Investment Advisors, believes consumers hold the key to how the soft landing will unfold in 2007. He also feels the expectations for December’s retail sales were too high. “What we’re seeing is about right,” he says.

"The consumer is going to remain sluggish for the first half of next year," Bitner says, "but 2007 will be the year the cloud of uncertainty lifts. In the second half of the year, we’ll see a gradual acceleration in the economy and consumer spending.”

Scott Kays, president of Kays Financial Advisory agrees. He's surprised that 5% to 6% growth in retail sales is being touted today as a disappointing number (considering the weakness in other sectors).

He also says today’s retail numbers don’t include gift card sales – and gift card sales are up something like 30%. "I think it was a good quarter and shows the consumer is healthy," Kays says.

Kays' outlook for ’07: “I’m projecting growth to be around 8% in earnings. If you take that and add 2% for dividends, that gets you to 10%. I think it’s entirely plausible to see a 10% to 14% return in the market next year."

S&P 500