The manager of Franklin US Opportunities Fund believes 2016 will likely surprise with modest corporate earnings growth, strong consumer spending and GDP growth in the 2% to 3% range.
He also said market pessimism has been driven by concerns about growth in emerging markets and collapsing energy prices, while political uncertainty of the forthcoming presidential election has also been a factor in recent volatility.
“Despite a rough start to the year, we don’t see a recession on the horizon, and believe the US economy is stronger than many believe,” he said.
“Every expansion since World War II has gone through periods of slow growth. I believe that when we look back in the rear-view mirror later this year, we will see this period as a growth pause in a longer expansionary cycle.
“The strength of the US consumer is one of the reasons we remain constructive on US equities. US consumer spending makes up approximately two-thirds of US GDP, so the health of the consumer is key to any investment outlook for the US.
“Employment and job growth continue to be strong, and tight labour markets are starting to impact wages and salaries. We believe this should have a positive effect on consumer confidence this year.”
Additionally, he singled out low inflation and interest rates, which will likely continue to support the ongoing housing market recovery in many areas as financing remains cheap.