U.S. Will Avoid Recession as Consumers Keep Spending, Bear Says

Dec. 26 -- The U.S. will avoid a recession next year as a ``stable'' job market keeps Americans spending amid falling housing prices and higher fuel costs, said Bear Stearns Cos. Chief Investment Strategist Jonathan Golub.

``It is increasingly clear that the U.S. consumer did not roll-over during the holiday shopping season,'' Golub said. ``We do not believe a consumer-led recession is in the cards.''

Golub said he ``wouldn't be surprised'' if stores exceeded the National Retail Federation's prediction for the slowest holiday sales season in five years. Better-than-expected November retail sales and ``solid'' sales the day after Thanksgiving are signs that consumer spending won't plunge, Golub wrote in a note to investors.

Target Corp. led retailers lower in New York trading today after the second-largest U.S. discount chain said that December sales will miss its estimate by falling 1 percent or increasing 1 percent. It previously predicted a gain of as much as 5 percent.

Golub said department stores and warehouse clubs may outperform low-end retailers such as Target and Family Dollar Stores Inc. because a sluggish economy will hurt low-income consumers more.

Retailers in the Standard & Poor's 500 Index slipped 1.7 percent at 10:45 a.m. in New York for the second-steepest decline among 24 industries. Target lost $1.43 to $51.04. Family Dollar retreated the most since Dec. 6, falling $1.10, or 5.5 percent, to $18.92.

Employment growth and fewer job cuts than in previous economic slowdowns will help Americans maintain spending, the New York-based strategist said.

Payrolls grew faster than expected in November, the government reported earlier this month, while the jobless rate held at 4.7 percent for the third month in a row.