NEW YORK--Despite recent market volatility, there are signs suggesting that while the economy might slow, it will not slip into recession, according to speakers at Boston-based MFS' annual investment outlook meeting here.

The one potential spoiler is the "empty house" problem, said James Swanson, an MFS portfolio manager and chief investment strategist for the mutual fund company.

During his discussion on the possibility of recession, Mr. Swanson offered reasons why the U.S. economy is not heading into a recession: the Central Bank has taken a moderate to easing approach to interest rates, and a corporate market that has not overindulged in spending.

Addressing the subprime market, Mr. Swanson said that it is a small part of the U.S. economy and that even if there is a 20 percent drop in price and a 40 percent default rate, the $150-to-$200 billion in losses that would result would be pretty diffuse.

What does present a risk to the economy, Mr. Swanson continued, are empty houses and how that will discourage construction of new housing and the jobs to roofers and others that such construction brings. The growth of the housing market in recent years has contributed over 1.5 million jobs and represented 6 percent of GDP, a share that today is around 4.5 percent, he continued.

Even the effects of the mortgage situation and higher gasoline prices should not push the U.S. into recession because there are offsetting factors, according to Mr. Swanson.

Families have additional sources of income to supplement wages, including rental income, bonuses, deferred compensation and transfer payments from the government, he continued. While a protracted spike in the price of oil would impact the economy, Mr. Swanson also noted that today the average that is spent on energy is much less than in the past.

Describing the impact of the U.S. economy on the world economy, Mr. Swanson explained that the "U.S. continues to be a big part of world growth but not a driver of world growth."

Globally, large-cap stocks are poised to show more strength, added David Antonelli, executive vice president and chief investment officer of non-U.S. and global investments and co-director of global research.

Another theme mentioned by Mr. Antonelli is the continued strong growth in emerging markets.

However, he stressed that even though there has been strong growth in emerging markets, he would be careful about putting additional assets in emerging markets right now, considering high-quality large capitalization companies outside of the U.S. But in the long run, over the next 10 years, emerging market stocks should perform very well, he said.

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