Manufacturers at the Helm
Even though manufacturing is a smaller part of the economy than it used to be, it will propel the economy forward.
This week, analysts were inundated with economic and corporate data. On balance, the news was positive, especially from the corporate sector. However, developments overseas rattled investors later in the week and caused markets to fall 1% for the week. New worries concerning debts of several southern eurozone countries, very poor new manufacturing order trends out of Germany, and continuing threats of tightening in China combined to throw a wet blanket on the world's bourses.
Meanwhile, positive news out of Cisco (CSCO), a major bellwether for technology spending, failed to set off a rally. Even a surprise drop in the unemployment rate to 9.7% from 10.0% couldn't halt the decline.
Despite the market's concerns, I steadfastly believe that the economy will grow at a 4%-plus rate for 2010, buoyed by a resurgent manufacturing sector in the first half and better construction numbers in the second half. I will continue to monitor the world situation as well as commercial real estate markets, which remain the biggest threats to the U.S. economy.
Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.