How Sustainable is the US Recovery?

Last year we saw relatively strong economic growth in the US, but a slowdown elsewhere, while oil prices have now halved and the US dollar has surged

Threadneedle Investments 3 March, 2015 | 4:35PM
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Morningstar's "Perspectives" series features investment insights from selected third-party contributors. Here, Nadia Grant, US equities fund manager at Threadneedle Investments, explains why she believes that US stocks are attractively valued in relation to other markets and why they will gain support from a broad-based economic recovery. 

We think the US economic recovery is broadly based and are forecasting GDP growth in 2015 of around 3%, which should provide a very supportive backdrop for equities. We expect the consumer to account for around two-thirds of this growth, at about two percentage points, up from 1.6 percentage points in 2014. The collapse in the oil price is benefitting US consumers enormously.

They were paying an average $2.14 a gallon, and just $1.80 in some States at the beginning of the year, rather than $3.50 before the oil price drop. These extra dollars provide a considerable boost to lower-income workers, who have a significant propensity to spend. Thus, the lower gasoline price is highly stimulating for the economy.

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Threadneedle Investments  actively manages £84.0 billion of assets (at 31 March 2013), investing on behalf of individuals, pension funds and corporations.