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US Analysts: US Recession Ending, But Global Stock Markets Still in Trouble - 2003-01-16

U.S. financial analysts say confidence in global financial markets remains low, even as some believe a recovery in the U.S. economy is under way.

After a year of corporate scandals and plummeting U.S. stock markets, there is some cause for optimism about an end to the U.S. recession, according to experts speaking at a global outlook conference.

Dartmouth College finance professor Kent Womack says that, even though U.S. unemployment rates are still high and there is a lingering fear among analysts that the strong real estate market may collapse, the U.S. economy will regain solid ground by 2004.

"Earnings are no longer going down in a significant way. They have probably bottomed out. I think some of the factors that we discussed, deflation, the housing bubble, give us room to be worried," he said. "They might string this thing out longer than a year."

Mr. Womack cites encouraging predictions by corporate executives as further cause for optimism.

The panelists' outlook for the global markets in 2003 isn't as optimistic. Investment strategist Diane Garnick says accounting scandals in the United States have discouraged investors, especially from overseas.

"Lots of folks have always believed that U.S. accounting standards are far superior to international accounting standards," she said. "Now that we've seen this explosion in U.S. accounting standards over credibility, many non-U.S. investors are far more concerned than U.S. investors. Their belief is that if the model that we were striving to get to doesn't work, then we must be in a lot of trouble."

Ms. Garnick adds the fear of volatility in the oil market and the uncertainty associated with Latin America and other emerging economies, will also inhibit growth in stock markets across the globe, at least for the near future.

The global outlook conference was hosted by Dow Jones, publishers of The Wall Street Journal, and creators of the New York Stock Exchange's central index, the Dow Jones Industrial Average.