Skip to Content
Investing Specialists

It's Not All About the Fed, Really

Bernanke and company won't make or break the economy single-handedly.

Mentioned: ,

With the regular economic calendar sparse, investors seemed to focus all of their attention on either China or the varied and seemingly conflicting news out of the U.S. Federal Reserve. Bad news on these fronts drove markets down for one of their worst weekly performances of 2013. While Fed news should never be ignored, it can neither take all the credit for the improved economy, nor is it likely to kill it single-handedly, as I detail later.

Real estate news for the week was relatively good, if not terribly exciting. The housing market should still be a big contributor to the U.S. economy in 2013. Changing gears, the U.S. manufacturing news was better than expected, although Markit's flash purchasing managers' report for April slipped just a smidge. Still, the U.S. index was in growth territory, unlike indexes for China and Europe. A weakening Europe and a more competitive Japan is certainly beginning to hit home in China. The U.S. is comparatively immune from a weakening China; however, Europe and other emerging markets will not escape the effects of China's softening.

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