The economy might slow, but it still has a good chance of avoiding a recession.
James Swanson, chief investment strategist at MFS, Boston, gave that assessment here during MFS’ annual investment outlook review.
Swanson listed several reasons for optimism.
The Federal Reserve Board has taken a moderate approach to easing interest rates, and big corporations have been careful about spending, Swanson noted.
The subprime mortgage market is such a small part of the U.S. economy that, even if there were a 20% drop in price and a 40% default rate, the resulting $150 billion to $200 billion in losses would have a relatively modest direct effect on the economy, Swanson said.