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Quarter-End Insights

Outlook for the Economy

Political, regulatory, and economic uncertainty conspire to keep growth stuck in neutral.

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  • Uncertainty slows spending.
  • Corporations have the cash, but are afraid to spend it.
  • Regulation is stifling the economy.
  • Consumers continue to push ahead slowly, cautiously, and consistently.
  • Besides consumers, exports are the biggest driver of the economy.

The U.S. economy continues to defy the predictions of economists of all stripes by neither collapsing nor breaking out on the upside. Instead, after an initial burst at the start of this recovery driven by inventory restocking, inflation-adjusted GDP growth seems to have settled into a less-than-satisfying growth rate of 1.5% to 2.0%. About half that growth is coming from non-U.S. markets that have driven exports up to 14% of GDP, an-all time record.

Robert Johnson, CFA does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.