Not Your Normal Recovery
The recovery has been slower than expected, but it may also be longer and more sustainable, says Morningstar's Bob Johnson.
The alleged Big News of the Week, the GDP report, turned out to be a relative nonevent. The 2.4% growth split the difference between the bulls--including me--that were looking for 3% growth and the bears that were looking for just 2% growth.
Perhaps more bullish news was that growth for the first quarter was revised to up 3.7% versus the more measly 2.7% estimate of a month ago. Consumers have been relatively consistent spenders, growing between 1% and 2% each of the four quarters in this recovery. Meanwhile, inventories, exports, and imports have jumped all over the place, creating volatility in the overall GDP figures.
This quarter, there was an almost unprecedented 29% increase in imports, which was the primary reason the GDP growth rate fell between the March quarter and the June quarter. Consumers have been spending a lot of their cash on electronics this recovery, and a lot of those goods are manufactured overseas, raising the U.S. import bill dramatically.
Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.