Europe and the U.S.: A Look Back at the Past 3 Years

Posted by Brad McMillan, CFA, CAIA, MAI

Find me on:

This entry was posted on Jun 10, 2015 1:42:32 PM

and tagged Commentary

Leave a comment

MarketOutlook_3I started this blog three years ago today, on June 10, 2012. At a guess, I’ve written almost 800 posts, including links to media appearances and monthly videos. That’s about 400,000–500,000 words on the economy, the markets, and, of course, lobster rolls.

It’s been a very volatile three years for these major topic areas. Okay, maybe not lobster rolls, but certainly for the economy and markets.

Europe: plus ça change

Looking back, it’s interesting to see what’s changed and what hasn’t. For example, three years ago I was marginally convinced that the eurozone would remain intact and wrote about Syriza losing an election in Greece. Now, of course, I’m marginally convinced that the eurozone won’t hold together, and Syriza, which has gained control of the Greek government, is busily working to prove my revised conviction right.

Other things remain the same. In June 2012, I wrote the original “Teenagers with Credit Cards” post, about Greece and Europe, and recently followed it up with an updated one, using the same metaphor.

Europe hasn’t really changed that much, overall. Although we seem to be approaching the end of the road for Greece, we thought pretty much the same thing three years ago. Anyone expecting to see resolution in the near future should look back at just how long this soap opera has been going on.

The U.S.: real improvements

Here in the U.S., however, things really are different now than they were three years ago. Back then, we were painfully negotiating a reduction in federal government spending, which was ultimately resolved by the sequester spending cuts in the face of the fiscal cliff. Politics remains news, but we’ve largely solved the debt and spending issues that threatened to sink the U.S. economy—at least for the moment.

Other areas of real improvement in the past three years include:

  • Unemployment, which fell from 8.2 percent to 5.4 percent
  • Job creation, with 7.777 million new jobs on the books
  • Consumer confidence, which increased from 64.4 to 95.4
  • Consumer spending growth, which has almost doubled, from 1.67 percent to 3 percent

Back in mid-2012, I saw a continued recovery here in the U.S., and that’s still how I view it.

What does the future hold?

Looking at the past three years, I think we can see the outline of the near to medium-term future as well.

  • Europe will likely continue to try more of the same, ignoring the fact that it hasn’t worked. The launch of European quantitative easing was one big breakthrough, but it seems that a similar breakthrough isn’t going to happen for Greece—at least until things get much worse.
  • Trends in the U.S. should continue to be positive, and growth looks likely to accelerate despite weak periods, such as the last quarter.

Overall, looking into my crystal ball, I see continued improvement here in the U.S. and continued deadlock and conflict in Europe. 

Subscribe via E-mail

New call-to-action
Crash-Test Investing
Commonwealth Independent Advisor

Hot Topics

Have a Question?

New Call-to-action

Conversations

Archives

see all

Subscribe

Disclosure

The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly into an index.

The MSCI EAFE Index (Europe, Australasia, Far East) is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.  

Third party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. Information on such sites, including third party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.

Member FINRASIPC

Please review our Terms of Use

Commonwealth Financial Network®