“Synchronized Global Growth”
While the post-election recovery has largely been attributed to optimism for the new administration’s initiatives, a closer look at recent economic data shows a different angle for recent strength.
Following a two-year downtrend in manufacturing and commodity-sensitive business activity, recent data has shown a synchronized expansion to the upside in key components of the global economy, and with a much wider lens. Recent economic readings have tended to surprise to the upside as evidenced by the CitiGroup Economic Surprise Index trending higher in all three major regions globally over the past 9 months. Such synchronized expansion has been elusive since the end of the Great Recession in 2009.
China’s first report on gross domestic product came out yesterday with a reading of 6.9% growth in Q1, the highest quarterly expansion in nearly two years. Europe is on pace for its best economic expansion in nearly six years with both PMI and GDP displaying renewed strength over the past six months. As the graphic below illustrates, the malaise in the U.S. looks like the roaring 20’s compared to what has transpired in Europe the…