Enter multiple symbols separated by commas

US Economy to Keep Growing Slowly: Goldman's Hatzius

The U.S. economy next year won't look all that different from this year, with low growth but little chance of recession, Goldman Sachs' chief economist Jan Hatzius told CNBC Monday.

Recession-themed newsprint cuttings
Recession-themed newsprint cuttings

"I wouldn’t go so far as to say we’ve dodged a bullet" on recession in the U.S., "but the risk has come down in the last couple of months to a degree," said Hatzius.

Hatzius predicted in Octoberthe U.S. had a 40 percent chance of recession next year, in part from the possibility Europe's financial problems could harm the fragile U.S. economy.

That part of the prediction hasn't changed.

"There are linkages" between the U.S. and Europe, Hatzius said. "We do expect more of a drag from Europe on the U.S...and if things were to get worse in Europe a recession in the U.S. is certainly possible."

Goldman forecasts U.S. GDPgrowth will be in the 1.5 percent to 2 percent range for the year, the same as 2011. But the first half of 2012 "looks slower, 1 percent or a little better," Hatzius said.

His expectations for equities are also "pretty muted," with very low expected returns.

"We think earnings per share will be roughly flat in 2012, in line with the relatively muted economic environment," said Hatzius. "So the risk-reward tradeoff isn’t that great."

Unlike the U.S., Europe is going through a "moderate" recession, the Goldman economist said. But he is more concerned about European sovereign debt , and the bonds coming due next year. Earlier Monday, European Central Bank President Mario Draghi warned bond market pressure will be "very significant" on the euro zone in the first quarter.

"The thing everybody is worrying about more than everythng else is the extent of the sovereign debt rollovers in early 2012," Hatzius said, including how will be bought by the private sector and how much liquidity will be provided by the ECB.

He predicts the ECB is "going to be more involved over time," but gave no further details.

Contact U.S. News


    Get the best of CNBC in your inbox

    Please choose a subscription

    Please enter a valid email address
    To learn more about how we use your information,
    please read our Privacy Policy.

Don't Miss

  • Why women cheat?

    Is cheating bad? Why do women cheat? The founder and CEO of affair website Ashley Madison tells all, including why he has his eye on China.

  • American Pharoah

    As American Pharoah chases the Triple Crown at the Preakness this Saturday, his earning potential can only go up.

  • Banking on your brand: Mika Brezezinski

    Mika Brezezinski, "Morning Joe" co-host, talks about giving women, entrepreneurs and millennials the tools to live and work to their full potential.

U.S. Video

  • Cramer: Here's a sign the market could rally

    Wall Street's been soaking in red, but "Mad Money" host Jim Cramer has one signal to watch for that could point to another run.

  • Burger war maneuvers

    Cramer looks at the number of company's selling burgers and tries to determine the quality names, as well as those to avoid.

  • Cramer: What's driving defense?

    Cramer says that even though President Obama has made it clear the US can no longer be the world's policeman, the country can become the world's arms dealer. Profiting from defense spending.