The stock market is rising, though on very light volume. The economy is growing, though most observers are uncomfortable that fiscal stimulus accounts for some —or much—of the gusto. Then there are complex issues aplenty to flummox forecasters, such as the hope that the U.S. export growth can make this recovery sustainable, tempered by concern that huge parts of the globe (our export markets) are sinking under a sea of debt. Overhanging all of this are worries about job growth, or the lack of it, ostensibly the result of anxiety among company managers about the recovery’s sustainability.
The great stew of recent economic statistics seems to justify but one conclusion: This recovery will be uneven, disjointed and chocked full of surprises—not a great outlook for corporate planners or investment managers, but a far better environment that we saw this time last year. There is an excellent deconstruction of the many economic forces at play right now from Morgan Stanley economist Richard Berner.
Berner expects a surprisingly strong 2nd quarter, and believes that any disappointment in the 1st quarter will translate into extra oomph for the economy in the spring. I think he’s right, though I’m not sure Mr. Market will stomach disappointments with such conviction.