Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Robert Johnson, CFA | 02-08-2012 11:00 AM

Four Positive Surprises for the Economy in 2012

The U.S. is particularly well situated compared with almost any other economy in the world right now, says Morningstar's director of economic analysis. These four factors should push 2012 GDP growth ahead of 2011's rate.

This video is an exclusive benefit of your Premium Membership.

Bob Johnson: I'm Bob Johnson, the director of economic analysis. I actually work with the stocks department [at Morningstar]. I actually sit with our stock analysts, and I was a stock analyst for many years, both on the sell side and the buy side, and then most recently I was head of the technology team that followed all the tech stocks and managed a group of people. And I came over to become an economist about three years ago now. So, I come to economics from a base in stocks and the real economy, not with a Ph.D. in economics. So, I come with a view that is maybe somewhat like yours.

So, I hope to give you a better flavor of what's happening in the economy today and try to give you some key points that you can watch in looking at the economy as we go ahead to figure out what's going on on your own. I think there is lot of confusion with a lot of the numbers; the numbers come out almost daily, and they are restated a million times. But if you know what to watch, they kind of have a language of their own. They kind of speak to you, if you will. We'll talk about it.

I hope to try to make this relevant to you. I don't know how many people here are thinking about buying a home? Anybody here thinking about buying a home at all, because we'll talk a little about that and the housing market. I think there is a great opportunity in housing. I think we're at kind of a historic low in terms of housing prices. I don't think they're going to run back up in a hurry, but I think I'll be able to talk to you a little bit about why I think that market is turning, and why I think there may be some good opportunities for you in the housing market.

I also hope to touch a little bit on inflation and pricing and what's happening there.

Then I'll talk about the disconnect that we're seeing in the economy right now. I think the U.S. economy is particularly well situated compared to almost any other economy in the world right now. I think that we're in a great position, but that doesn't necessarily mean that stocks and corporate earnings are going to improve a lot from here, because so many corporations get a huge portion of their earnings overseas, 25% to 30% is not unusual for a Fortune 500 company, and as those markets weaken a little bit, it certainly may hurt their earnings. But the U.S. economy and U.S. employment will probably look increasingly better, just because of things that are already "baked in," if you will.

So, I am going to start out and give you my view of where the economy has been, give you my forecast, let you know exactly where I stand right upfront, so when I come back a year now, you can say, "Bob, you were wrong!" And then we'll go from there to talk about what the key drivers are in the economy, and I'll close with what's the main topic up there, "The Positive Surprises in the Economy," and I think there are a lot of them out there for 2012. I have four I am going to talk about, a couple of them aren't even so much surprises anymore, unfortunately. I've worked on this talk for a while, and in the last 60 days, the surprises have kind of turned into reality a little bit. So, unfortunately, it's taken away some of the surprise, but that's the focus for today. And I hope to have time for your questions. If I am not making myself clear on something, let me know what questions you have as we go along. I'll save time for questions at the end, but if I am not clear, please stop me, and I'll explain myself a little bit more clearly.

Read Full Transcript
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article