“Until inflation moves meaningfully back toward the Fed’s long-run 2 percent target, it will be too soon to expect the Fed to taper -- let alone end -- its purchases,” Bank of America Merrill Lynch economists wrote in a May 16 report.
Investors aren’t preoccupied with political developments in Washington. Asked about the repeated confrontations between the president and Congress, 57 percent say the brawling isn’t affecting their investment decisions, while 38 percent say they would normally invest more in the U.S.
“The political fights in Washington were inevitable when President Obama won last November and the Republicans kept control in the House,” says Fitzpatrick. “Financial markets understood this from the beginning, which is why they have been little affected by the squabbling.”
Not everyone is convinced of the recovery’s staying power. Jonathan Sadowsky, 42, a portfolio manager with Vaca Creek Asset Management in Santa Monica, California, says “the lack of quality job and wage growth” along with insufficient investment may ultimately hobble the rebound.
Fedor Bizikov, a senior portfolio manager at GHP Group in Moscow, says he expects weakness in Europe and elsewhere eventually to spread to the U.S. and spark a new recession. “Unemployment is still high in terms of underemployment and declining labor-participation rate,” he says.
April’s 7.5 percent jobless rate was higher than the 25- year average of 6 percent, according to data compiled by Bloomberg. A reminder of the economy’s continued frailty came yesterday when the Labor Department said the number of Americans filing for initial jobless benefits unexpectedly rose to 360,000 from 328,000 the week before.
Since the recession’s end in June 2009, the economy has expanded at an annual rate of 2 percent. After slowing this quarter, it’s expected to accelerate to a 2.9 percent growth rate in the fourth quarter of 2014, according to economists surveyed by Bloomberg.
“Momentum is building, and the U.S. is again taking a lead in the economic cycle,” says Francis Infante, 62, treasurer of Caixa Geral de Depositos in London. “Asia is slowing down and the EU is still trying to find which way to go.”
The survey of 906 Bloomberg customers was conducted by Selzer & Co., a Des Moines, Iowa-based pollster. The results carry a margin of error of plus or minus 3.3 percentage points.