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Blackrock CEO predicts manufacturing boom

October 26, 2012: 2:39 PM ET

Larry Fink says fiscal cliff aside, things look good.

FORTUNE -- Could it be morning in America again?

Larry Fink, who is the CEO of Blackrock, one of the world's largest investment firms, says the U.S. economy might be primed for a much stronger recovery than many people predict. Fink says the combination of the rise of the Chinese consumer along with an abundance of cheap natural gas could lead to a manufacturing boom in America.

"I was just with a CEO of a large company who said he was closing a plant in Germany and opening one up in America," says Fink. "Cheap natural gas is going to spur a manufacturing renaissance in the U.S."

MORE: The key to a housing recovery is still investors

Fink made his remarks about the U.S. economy at The Economist's annual Buttonwood conference. Many of the other speakers at the conference voiced concerns about the future of the Euro and how the U.S. economy will react to the fiscal cliff. PIMCO's CEO Mohamed El-Erian kicked off the conference by saying that his outlook was much more uncertain than usual, and that U.S. bond prices are likely to fall. A panel on regulatory reform seemed to suggest that new banking rules implemented by Dodd-Frank in the wake of the financial crisis have made the U.S. economy less safe.

Fink says U.S. banks are in "great shape." Loans are up 20% and credit is being unlocked. Housing is turning around. Fink predicted growing consumption in China should save that country from a big downturn.

MORE: 3 scariest things about this disappointing earnings season

Fink's one big concern was the fiscal cliff. He said he had recently met with two U.S. senators, one of which is in the compromise-friendly "Gang of Eight," who said they wouldn't promise a deal would be made to put off the mix of tax increases and spending cuts that are set to kick in January 1st. Fink said if Washington doesn't reach a deal, he thought the U.S.'s credit rating would be downgraded again.

Nonetheless, Fink said his guess was that the Congress by the end of the year would avoid the cliff, by agreeing to as much as $400 million in spending cuts, along with an extension of the Bush tax cuts.

"If I didn't have to worry about the fiscal cliff and our debt, I would be a raging bull," says Fink.

That's kind of like using earnings before all the bad stuff accounting. But it's nice to hear some optimism nonetheless.

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About This Author
Stephen Gandel
Stephen Gandel

Stephen Gandel has covered Wall Street and investing for over 15 years. He joins Fortune from sister publication TIME, where he was a senior business writer and lead blogger for The Curious Capitalist. He has also held positions at Money and Crain's New York Business. Stephen is a four-time winner of the Henry R. Luce Award. His work has also been recognized by the National Association of Real Estate Editors, the New York State Society of CPA and the Association of Area Business Publications. He is a graduate of Washington University, and lives in Brooklyn with his wife and two children.

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