FARGO
The U.S. economy faces a bigger threat from a "fear-cession" than a recession, an economist said Thursday in Fargo.
"What stands out to me is, the degree to which fear is prevalent," said James Paulsen, chief investment strategist for Wells Fargo.
Paulsen spoke to about 350 bank customers, businesspeople and community leaders. He comes annually to Fargo to give his views on the economy and investments.
The national economy has problems, particularly in the auto and housing industries, Paulsen said.
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He predicted the economy will weaken in the first half of 2009.
However, the economy has a lot going for it - strong exports, for instance - and has very little chance of falling into a depression, he said.
"Betting on depression is a very bad bet," he said.
Current economic conditions aren't even the worst of the past 30 years, he said.
"We're not as fundamentally challenged (economically) as we were in 1980 and 1990," he said.
But media reports and political leaders have magnified current problems, he said.
For instance, many Americans are alarmed to hear that 15 U.S. banks have failed this year, he said.
That number needs to be compared with the 1980s and 1990s, when more than 100 banks failed annually, he said.
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Calming unfounded economic worries is a priority, he said.
"We need to convince people the king still has clothes," he said.
Paulsen is optimistic about the U.S. stock market.
"The environment for investing today is a very good one," he said.
Investors typically are torn between greed and fear, he said said.
Fear is winning out now, even though market conditions call for greed, he said.
San Francisco-based Wells Fargo has $622 billion in assets, providing banking, insurance, investments, mortgage and consumer finance online and through almost 6,000 stores across North American and internationally.
The Forum of Fargo-Moorhead and the Herald are Forum Communications Co. newspapers.
