Though the economy is recovering/growing, investors in equity markets seem to disagree. After beginning the year with anticipation for growth, domestic markets were derailed by debt problems in the EU and the oil spill in the Gulf of Mexico. Add to these prominent stories of persistently weak employment data, high US debt levels and following the high GDP level reached in 4Q09, prospects for 2010 became more tentative.
We continue to see strength in the economy but GDP comparisons to previous recoveries show this time around to be relatively weak, leaving doubt about sustainability and the ability to create jobs. Because of this, we are reading investor sentiment to be waning. We should experience increased volatility, trending positive toward year-end as growth numbers stabilize. It won’t be high growth – but it will be growth.