Sustainable Growth
The jobless rate unexpectedly fell to 8.9% in February, the lowest level in almost two years, and employers boosted payrolls amid growing confidence in the expansion, the Commerce Department said March 4.
"We think the economy is in a self-sustaining recovery right now," Dean Maki, chief U.S. economist at New York-based Barclays Capital Inc., told Bloomberg Television after the employment report was released.
Mark Zandi, chief economist for Moody's Analytics Inc. in West Chester, Pennsylvania, said a multiyear plan to cut the deficit can be carried out without derailing the recovery.
"Shrinking the deficit is likely to be a drag, but it doesn't need to undermine growth," he said in a telephone interview. Zandi recommended in a report last month that Congress postpone spending cuts until 2012, when he anticipates the U.S. economy will be stronger.
"If Washington comes out with a plan that begins to restore some semblance of sensibility to our fiscal situation, the markets would see that as a positive," Brian Berghuis, manager of the $21.4 billion T. Rowe Price Mid-Cap Growth Fund, said in telephone interview.
Underachieving Market
Such a deal could boost the dollar and stocks while cutting commodity prices and expectations for inflation, Berghuis said. His Baltimore-based fund beat 89% of rivals over the past five years, data compiled by Bloomberg show.
Rodriguez, the CEO of First Pacific Advisors, isn't optimistic about the immediate future. He said stock market returns will "underachieve" for the next several years and the economy's growth will be sluggish as consumers struggle to recover from the financial crisis.
"There is a possibility we are already seeing the high- water mark in employment growth," Rodriguez said.