Given a strong consumer, slumping imports, and increased government spending, 2015 U.S. GDP growth could top Morningstar’s long-term 2 percent to 2.5 percent growth target; then again maybe not.
That’s the latest economic news from Morningstar, who note they are sticking with our long-term growth rates as demographics limit long-term growth.
“China, the U.S. Federal Reserve, and a renewed slump in commodities dominated third-quarter news, pressuring equity returns around the world, especially outside the United States,” the Chicago-based research firm notes. “Despite these pressures, the U.S. consumer continues to hold up well with restaurant sales, auto sales, and new home starts still in recovery mode.”
Specific to the stock market, the firm argues that the S&P 500 experienced its first correction since 2011, but because the market was fully valued before, buying opportunities remain scarce.
“The energy and basic materials sectors are under pressure because of oversupply and concerns about the health of China’s economy. We don’t see relief for energy firms until at least 2017, and possibly not this decade for industrial commodity miners.”
The financial-services sector looks undervalued, it adds. Although the Federal Reserve declined to raise interest rates at its September meeting, higher rates seem inevitable over the long run.
“Our other best ideas depend on company- and industry-specific themes, including in railroads, media, and biotech.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
