Outlook for Global Economy Depends on Severity and Duration of European Financial Stresses

LONDON and NEW YORK, October 27, 2011 — Many key cyclical sectors are still depressed and appear more likely to rise than fall, pointing to a "basement thesis" in autos, capital spending and housing according to BNY Mellon Chief Economist Richard B. Hoey in his October 2011 Economic Update.

In sharp contrast to the usual pre-recession condition, auto sales have recovered only from the "sub-basement to the basement" and Hoey believes that this vulnerability to a substantial decline is limited.

"We believe that U.S. auto sales are more likely to rise than fall," says Hoey.  "A similar 'basement thesis' applies to other cyclical categories, notably capital spending.  Housing is a special case, still stalled at a sub-basement level, with residential investment as a share of GDP now severely depressed."

Turning to the economy worldwide, Hoey believes that the outlook for the global economy depends crucially on the severity and duration of European financial stresses.  

"We expect neither a disorderly financial meltdown nor a clean orderly resolution of these stresses," Hoey says.  "Given the slow speed of European decision-making by various policymakers, we expect a semi-orderly stop-and-go process which averts the worst-case outcome but reduced European financial stresses only gradually over time."  

See http://www.bnymellon.com/foresight/update-video.html for Hoey's complete October 2011 Economic Update.  

BNY Mellon Asset Management is the umbrella organization for BNY Mellon's affiliated investment management firms and global distribution companies.

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 $25.9 trillion in assets under custody and administration and $1.2 trillion in assets under management, services $11.9 trillion in outstanding debt and processes global payments averaging $1.6 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. Additional information is available at www.bnymellon.com and through Twitter@bnymellon.

All information source BNY Mellon Asset Management at September 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 authorised. 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. Authorised and regulated by the Financial Services Authority. A BNY Mellon Company(SM)