What To Expect From 2012:A Goldman Sachs Economic Perspective-plus some stock tips

A tone of caution pervades the thoughts of a leading analyst when he views the 2012 prospects for the market and the rest of the economy.Jan Hatzius,Chief Economist at Goldman Sachs,feels that 2012 will see sluggish growth,with continuing repair of built-up imbalances.Recovery of the labor market will be very slow and halting.We suspect the first half of 2012 is gonna be a little slower.We suspect that the truth is decent growth,but a little softer.
We're still in a very macro-driven environment,with high correlation.We do think Europe is in a significant recession,and the impact will be greater on the U.S. than it has been so far-a full percentage point greater.
I think there will be a slight increase in housing market normalcy.Small businesses have done worse than large because they are more linked to construction,and more dependent on banks for financing,rather than capital markets.
We have a depressed economy.We think real GDP will be 1.5-2%.It's unlikely that you'll get major initiatives from Washington before 2013,in a presidential election year.Unemployment is not directly under the control of policymakers,although it's politically unacceptable,Dr.Hatzius observed.
Update:Goldman Sachs believes Vodafone may appreciate more than 50% over the next two years.It has downgraded MasterCard to neutral from buy,and Accenture to neutral from outperform.MetLife has been upgraded from neutral to buy.
Goldman Sachs(GS),MetLife(MET),MasterCard(MA),Vodafone(VOD),Accenture(ACN)

Nothing Fast About Recovery

You don't get a fast recovery,Harvard economist Ken Rogoff points out.It doesn't mean you're about to enter something worse.The larger risk is government debt.There is always a sovereign debt problem after a crisis as spending explodes.He thinks housing prices still have further to fall,but a double dip recession is about as likely as in a random year.He wouldn't say there's an elevated risk of one.
There are fears that slowing Chinese growth and the Euro Zone debt crisis could hinder recovery.As China normalizes and grows,it's going to have bumps like everyone else.To think it's all upside is just absurd.Property prices and leverage are probably the best indicators you're going to have a problem.China cannot keep growing its exports at the same rate it's been doing.At some point,they have to redirect their strategy.
The Euro Zone banking system has moribund banks in it,but it's not gonna get better if there's denial,Professor Rogoff believes.
Results of stress tests of Euro Zone banks are to be released this month.U.S. banks passed a similar test earlier in the financial crisis.
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