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By Jason Stipp and Robert Johnson, CFA | 09-05-2012 01:30 PM

3 Economic Surprises in 2012

Unusual strength in exports, persistent government weakness, and continued rock-bottom interest rates have been unexpected factors in the economy this year, says Morningstar's Bob Johnson.

Note to readers: Bob Johnson is on vacation this week; we are posting this recent video report in place of his regular Saturday column.

Jason Stipp: I'm Jason Stipp for Morningstar.

At the end of 2011, Bob Johnson, our director of economic analysis, had a few things on his radar that did come to pass in 2012.

There were also a few surprises that he wasn't necessarily expecting.

He is here with me to talk about both of those topics today.

Thanks for joining me, Bob.

Bob Johnson: Great to be here.

Stipp: Let's start with some of the things you expected to happen that did come to pass; there were four key ones that you mentioned in December 2011. What were those and how have they come to pass in the way you expected?

Johnson: I think certainly one of them was the strength in the auto industry, and I think we really saw that with some recent numbers that we’ve gotten out of the industry. We just got 14.52 million units [seasonally adjusted annual rate] for the month of August, which is the best number since the "cash for clunkers" number way back in 2009, when you had all those incentives. So, that's been really a great number, and it's been better than everybody thought it was going to be; at the start of the year, they were thinking maybe it would go from 12.8 to 13.5 million, now it looks more like 14.5 million.

Stipp: So, good demand in autos. Another one, sticking with the industrial sector, is in aerospace. What was that?

Johnson: That was Boeing, which is slowly getting better, but it hasn’t taken off like a rocket--no pun intended--yet. But we have gotten better; we’ve gone from practically no airliners to two or three a month in terms of the new 787 program, and they hope to get up to a number more like 10 over the ... next 18 months. So, some of that is yet to come, but we've gotten some of it.

Stipp: You had domestic energy production as a bright spot, and we are seeing that playing out in the Dakotas, for example.

Johnson: Yes, North Dakota is now a bigger producer than Alaska, which was kind of a dream when we started all this, and now North Dakota is indeed bigger.

I thought, especially as gas prices stabilized a little bit, that maybe we’d see some slowing in that North Dakota production growth rate, but we’ve actually still continued to grow right up through the most recent monthly data that we have in terms of the amount of oil that they are producing. And they now produce 10% of the U.S. oil in North Dakota.

Stipp: And the last one you pointed out in December 2011, and I think a lot of economists would now agree with you, is the housing market. And we've seeing some great data there over the last few months.

Johnson: Yes. My hope was that we’d see some better starts, and so that one really has happened--housing starts are up about 25% year-over-year. So, that’s been a great number. And that, maybe you could say, could be slightly anticipated. The one that's really been the huge surprise [is housing prices]. I was just hoping that prices stayed flat, and now it looks like we’ll probably have a 5% price appreciation during the full course of 2012, and that’s just really great news for the consumer.

Stipp: So, four things you expected at the end of last year playing out to various levels in 2012.

What about the surprises, though? What are some of the things that you didn't expect to happen, or that you expected to happen but haven't yet happened, in 2012. What were the surprises?

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