From the conversations I have had with investment professionals over the past while, it is my belief that the biggest surprise in the market would be if economic growth was strong and sustainable for some time.
It would surprise the heck out of me. Though I believe economic growth will beat estimates over the next few quarters as inventories are rebuilt and companies re-hire as demand picks up, I expect growth to be substandard for several years.
However, that is not what the ECRI's index of leading economic indicators is suggesting. In fact, it is saying that growth will be better than what most investment professionals believe.
With the economy still mired in a rut and consumer confidence struggling to rebound, the words “record high” are not something we hear very often (unless, perhaps, in reference to the job market). Which makes the surge in the growth rate of the Economic Cycle Research Institute’s Weekly Leading Indicator, the WLI, all the more impressive. “Rocketing is the word,” said Achuthan in an email. ...
“Given the growing strength in ECRI’s objective leading indexes, the odds are rising that at least the early stage of this economic recovery will be the strongest since the early 1980s.”
The purpose of the market is to confound the most people, most of the time. A strong economic recovery would be most confounding to market professionals, in my opinion. And that would include me.