When the world's biggest economy sneezes, the rest of the world catches a cold. But the violent nose-blowing brought on by the financial crisis appears to be abating. Laura Miller asks whether the US is now a healthier bet for investors.
Evaluating the US economy is a numbers game – and by numbers, read data. There is a lot of it to factor in, and often the figures point in several different directions.
Take four key indicators – retail sales, unemployment claims, house building figures and the stockmarket.
Sales at retailers climbed 0.4% last month, according to the US Commerce Department figures. However, this was short of the 0.8% gain that was the median estimate of 82 economists surveyed by Bloomberg. Excluding the biggest gain at car and parts dealers in seven months, demand was little changed from May.
Wild West or American Dream: Is the US now a healthier bet for investors?
Better news comes from unemployment claims which dropped by 24,000 to 334,000 in the week ended 13 July, according to US Labor Department figures.
How about that housing market, the collapse of which following the breakdown in the sub-prime mortgage sector precipitated the global financial crisis?
The sector has been a bright spot in the world’s largest economy for the past few months. However, recent news is less positive. A sharp slowdown in building of US apartments put the pace of new residential construction at its lowest level in ten months in June.
And what has the stockmarket made of this data? The numbers are good. The Dow Jones Industrial Average is up 23%, year to date. The broader S&P 500 is up 25%.
Multi-managers and analysts have been looking at the data too and a consensus is emerging – they like what they see.
Aberdeen Asset Management senior portfolio manager on the multi-manager desk Robert Bowie believes the US equity market represents a “relatively attractive opportunity” and remains overweight in the country.
“The recovery in house prices not only stimulates transactions and construction, but also has a significant impact on consumer sentiment as negative equity is reduced and overall net wealth improves.
“Importantly an improving housing sector also has a strong multiplier effect within the economy, with jobs created in other sectors which benefit from the housing recovery,” he said.
The US positions held within the Aberdeen multi-manager funds include the Findlay Park American fund - which has been held for more than a decade – and the Threadneedle US Extended Alpha fund.
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