ST. PETERSBURG, Fla. – The U.S. equity market hasn't yet run out of steam and continues to offer the best investment opportunities, says Milton Ezrati, senior economist and market strategist at Lord Abbett.

"There's still value in this market," he told a room full of branch managers and banking executives gathered at the Raymond James Financial Institutions Division Symposium here on Tuesday.

While he conceded that the market is not a "drop-dead gorgeous" as it used to be, it doesn't mean it's not attractive, he said.

Ezrati pointed to valuations as a reason for his upbeat outlook, saying that the market's price-earnings ratio is about where it's averaged for the last 30 years.  In addition, he anticipates earnings growth of 5% to 6%, despite the slow-growing economy.  That, combined with the market's 2% dividend yield, translate into a respectable 7% to 8% return on equity, which "ain't bad relative to bonds," Ezrati said.

The 2% dividend yield is even more attractive relative to cash, which can earn a measly 25 basis points if invested by the very best advisors.  "That's 175 basis points above cash," Ezrati noted.

Indeed, he said, there's enough value in the market to withstand "some pretty hefty increases in short-term rates," unless the economy slides into recession, which he said is highly unlikely.

Ezrati cited a number of reasons why a U.S. recession is "not going to happen," including an improving real estate market. "The U.S. economy has never gone into recession when real estate is improving, even if it's sluggish," he said.

Other reasons the economy is unlikely to go into recession include improving state and local governments, which for the first time are starting to see net revenues increase, and strengthened U.S. households, which have shed $1 trillion in debt. In addition, corporations are flush with cash, and recession occurs only when corporate America is squeezed and has to cut back, Ezrati said.

Read more: