Midvale firm predicts a 'healthy' 2006

The Dow will hit 12,000. Corporate earnings will see 10 percent growth. And the U.S. economy in 2006 will post "healthy, somewhat predictable, reliable growth," a Midvale-based investment advisory firm predicted Friday.

At its seventh annual economic forecast, Cannon Tingey Investment Advisors expressed optimism that 2006 — barring extraordinary shocks — would be a good, though not eye-popping or shriek-inducing, year for the U.S. economy,

"We believe that sometime in 2006, we'll see a Dow 12,000 number," said Jon D. Tingey, a principal with the firm. "We're very constructive about the stock market. We see a lot of brightness. There's a lot of negative news out there, but there's also a lot of positive things going on. We're very constructive, and very optimistic about the economy, and particularly the capital markets."

The American economy proved itself "remarkably resilient" in 2005, despite a disappointing dip in the fourth quarter, Cannon Tingey principal Alan B. Tingey said. Through hurricanes Katrina and Rita, the energy price spikes and rising interest rates, consumers remained active and businesses continued to report record profits.

Still, the stock market remained muted, Alan Tingey said. Consumers seized on the twilight of interest rates, diverting money that might have gone into the markets toward real estate. Investors worried about increased tension in the Middle East and other oil-producing regions. The war in Iraq, and the threat of terrorism, continued.

This year should see some of those concerns allayed, Alan Tingey said. The Federal Reserve likely will raise short-term interest rates only once or twice more. Inflation will hold at a "controllable" 2.5 percent to 3 percent rate, said Jon Tingey, while corporate profits continue to see upwards of 10 percent growth.

Energy prices should peak and moderate and, as the real estate market cools, more money likely will again be directed at the capital markets. Jon Tingey predicted that the S&P 500 market could see a 12 percent increase over the next 12 months.

"A year from now, we'll be talking about 2006 at about 3 percent to 3.5 percent (economic) growth, which is good," Jon Tingey said. "It is a very sound, fundamental, sustainable, dependable rate of growth."

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