Economist: U.S. Economy 'Fundamentally Sound'

ByJohn S. McClenahen Perhaps the judgment is a bit suspicious because it comes from a perennial bull in the midst of a bear market. But Bruce Steinberg, chief economist at Merrill Lynch & Co., New York, is putting into words what several other economists are thinking. The U.S. economy is "fundamentally sound," says Steinberg. "We believe that the economy and earnings will be fine." Retail sales that jumped 1.1% in June, new auto-sales incentives and rising mortgage refinancing activity are just three things that encourage Steinberg. "We don't believe that recent equity market declines point to economic weakness or will be a self-fulfilling prophecy," he says. "At some point, probably sooner than later, financial markets will again be guided by economic fundamentals."