Report from BNY Mellon Investment Manager Also Suggests Eurozone Effect

SAN FRANCISCO and LONDON, August 26, 2011 — Economic growth in the U.S. over the next 12 months is expected to decline to around 2.0 percent, significantly lower than the 3.1 percent predicted as late as June 2011, according to the proprietary macroeconomic model of Mellon Capital Management, part of BNY Mellon Asset Management.    The slower growth expectation is discussed in a recent white paper from Mellon Capital, "Impact from the Recent Turmoil: A Macroeconomic Outlook."

The report attributes the lower growth forecast in the U.S. to the impact of the uncertainty of government policies during a soft economic patch.  The weakening economic outlook, in Mellon Capital's view, could limit earnings growth for the companies comprising the Standard & Poor's 500 Index to approximately 6.8 percent over the next 12 months, well below the consensus forecast of 14.1 percent. Mellon Capital also warns that deteriorating conditions in the Eurozone could pose a threat to financial markets.

"While our models are forecasting earnings well below the consensus, the situation appears to be far better than 2008, when, according to our model,  the probability for negative gross domestic product (GDP) growth rose to 30 percent before the Lehman failure," said Jonathan Xiong, managing director and global investment strategist in Mellon Capital's global asset allocation group.  "This time, even if U.S. GDP growth falls to zero percent, we believe the companies in the S&P 500 should post earnings gains since they derive nearly half of their earnings from outside the U.S."

Looking at the Eurozone, Mellon Capital suggests the lack of a long-term solution to the debt problem may result in a prolonged period of uncertainty that ultimately ends with the restructuring of the debt in certain peripheral nations.

"We believe the sovereign crisis in Europe represents a much larger and more complicated structural issue than the U.S. debt downgrade or austerity plans," said Xiong.  "While the recent actions by the European Central Bank to purchase bonds in Italy and Spain seem to have eased short-term uncertainty, we do not believe this is a long-term solution to resolving the sovereign debt issues in Europe."

Founded in 1983 by innovators in the investment management field, Mellon Capital Management Corporation applies a disciplined and analytical approach to global investment management strategies. The firm has $229 billion in assets under management, including assets managed by dual officers of Mellon Capital Management Corporation, The Bank of New York Mellon and The Dreyfus Corporation, and $9.7 billion in overlay strategies. Additional information about Mellon Capital is available at www.mcm.com.  It is part of BNY Mellon Asset Management, one of the world's largest asset managers.

BNY Mellon Asset Management is one of the world's leading asset management organizations, encompassing BNY Mellon's affiliated investment management firms and global distribution companies. Information about BNY Mellon Asset Management can be found at www.bnymellonam.com.

BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets.  BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, offering superior investment management and investment services through a worldwide client-focused team.  It has $26.3 trillion in assets under custody and administration and $1.3 trillion in assets under management, services $11.8 trillion in outstanding debt and processes global payments averaging $1.7 trillion per day.  BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK).  Additional information is available at www.bnymellon.com and through Twitter @bnymellon.

All information source BNY Mellon Asset Management at June 30, 2011.  This press release is qualified for issuance in the UK and US and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorized. This press release is issued by BNY Mellon Asset Management (US) and BNY Mellon Asset Management International Limited (ex-US) to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance. Registered office of BNY Mellon Asset Management International Limited: BNY Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorized and regulated by the Financial Services Authority. A BNY Mellon Company(SM)