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Wells Fargo Senior Economist Mark Vitner on the economy, worries over China and the fiscal cliff.
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I -- -- big week for the economy.
With four days away from the next big reading on the state all of the US economy and the July jobs report that's a week -- come -- -- and a company from Charlotte is mom but not Wells Fargo senior economist.
-- mock.
These -- two very big reports we've been saying on our show expressing an opinion.
That it looks like we're headed for real weakness in these two reports GDP we think maybe one point three annualized growth that's not been.
And the jobs report could even show some job destruction.
What do you say.
But certainly possible -- number effort for real GDP in the second quarter's one point two -- and we've tried to be as optimistic as possible put that number together.
Given the benefit of the doubt the consumer spending -- -- and Bell's investment one point 2% growth on an annualized basis that's an economy dead.
Flat on its back isn't.
It's it's pretty much dead in the water and and that's even ahead of a lot of the uncertainty that we're dealing with in the second half of the year.
I think there's there's a lot of concern about the near term prospects for the economy.
I don't think there's enough concern out there about the economy's longer term prospects because.
When I look at the numbers I think we're going to be hard pressed to grow faster than 2%.
For the foreseeable future and and I think that has.
Significant consequences for the federal budget problems that we're facing.
And it also has consequences for the equity market can you put your finger on the primary reason.
And just prolonged slowdown.
Well in the very near term it's this this incredible amount of uncertainty that we have about what's going to happen in Europe and and we go around the country we talk with companies.
The the refrain that we hear more often than not is mark I just don't see how this is not going to end badly.
Now now that's and that's that's a pretty pessimistic view to take its not like I can't see how this is going to end well they've given up on that they just don't see how it can end badly.
And then there's a lot of concern about China China's economy has -- a whole lot businesses that that that have operations in China are saying that inventories are stacking up.
And then we've got this fiscal -- which which actually is number three to all of those this like how on earth does that going to be solved you know -- -- -- optimistic.
Our company says -- that's number one the fiscal cliff that uncertainty factory feel like that's issue number -- That's what I say you don't agree -- you think Europe and China are -- bigger than fiscal cliff.
I think Europe and China are more immediate there -- -- impacting corporate earnings I think the fiscal -- is the biggest thing for for our economy.
Going into 2013.
But in terms of the second and third quarter.
It's Europe and China.
-- -- -- here's what this is that the casket quick question for you.
I understand how Europe affects our stock market but how do you see Europe affecting the jobs market in the United States right now.
Well it.
Right now the way I think Europe and affecting it is that the corporate earnings have come under incredible amount of pressure because of of the slowed -- of their of their growth overseas.
If you look at it that the US economy.
In the three years of economic recovery while on manufacturing and exports make up a relatively small proportion of our economy.
-- the -- for about twice as large -- share of economic growth.
And now that that's weakening that's having a negative impact on hiring.
Also just the increase and uncertainty whenever you have an increase in uncertainty you don't know how that's are gonna play out in Europe are they going to lead to tighter credit markets -- it was gonna cost.
Credit spreads that -- the blow out.
And and and lending to become more difficult if if that happens that companies -- -- -- hoard cash and they wanna put off any major decisions I think that that's already happening.
You know -- but -- we often come to you when we usually see a smiling face.
But today we've gone consume a Fuller road right now right there in front of us.
And that consumes all of us but mark thanks very much joy explode import and we appreciate it we'll -- against thank you.
-- to -- with Stewart okay.
