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.
"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.
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.