Fink says US first-quarter growth will be 'disappointing'

[NEW YORK] Laurence Fink, whose BlackRock Inc is the world's biggest asset manager, sees a "very disappointing" quarter of economic growth for the US, driven by lower oil prices and weak consumer spending.

"Europe is going to show higher GDP than the US," Mr Fink, BlackRock's chief executive officer, said in a telephone interview on Thursday. "We're going to have a very disappointing first quarter. People will say it's weather - it's because the consumer isn't spending the money they're saving from the gasoline pump. You're seeing the slowdown in the oil sector."

The euro area is a beneficiary as a strong dollar gives it a competitive advantage, its central bank continues its quantitative easing program, its banking system has been cleaned up, and because of Europe's success in energy, Fink said.

Analysts have said that unusually harsh winter weather depressed the US economy in the first quarter, lopping 0.5 per centage point from growth, according to the median estimate in a Bloomberg survey of 37 economists conducted March 30 to April 1.

The Federal Reserve's March Beige Book, a compilation of anecdotal business information from the central bank's 12 districts, showed the US showed signs of a rebound as the weather improved. The economy grew at a "modest" or "moderate" pace in eight of those regions from mid-February to the end of March, according to the Beige Book.

Earnings Rise The March rebound in US retail sales was less impressive than economists forecast, signaling consumers are in no rush to spend the windfall from cheaper fuel prices. Purchases increased 0.9 per cent, as the median forecast of 87 economists surveyed by Bloomberg projected retail sales would advance 1.1 per cent. Other reports showed inflation is tame and small-business confidence ebbed.

BlackRock on Thursday reported that its first-quarter earnings rose as customers put about US$70 billion into its funds and assets rose to US$4.77 trillion. Assets were reduced by US$87.6 billion as the New York-based money manager converted foreign currencies back into dollars.

Mr Fink said pressure from a stronger dollar will abate because the currency's strength won't last and the rally was premised on a view that the Federal Reserve will tighten its monetary policy soon.

"The Federal Reserve is going to be a little more reluctant in raising rates," he said. "Certainly they're going to delay until September," and will couch their statements with "more circumspect language or dovish language," he said.

BLOOMBERG