With expectations for economic growth catching up with data, Europe in focus once again, and geopolitical concerns boosting oil prices, some analysts have opined that the U.S. economy is headed for another growth slowdown like we saw last summer, or even a brand new recession. Others argue that this time is different, in particular that surprisingly positive jobs growth will continue to drive the recovery.
The strong correlation between the Citigroup Economic Surprise Index and market performance suggests that sinking investor expectations could mean trouble for the markets. But is this really going to be a repeat of last Spring?
According to this chart, maybe not—or maybe not yet. Setting the high points of the index this year and last year against one another demonstrates that data has continually beat expectations for a far longer period than it did last time around. This could suggest that economic growth is more robust than it was last year, or it could simply mean that markets may still dive but not at the same rate they did last time around.
There are similarities between the two periods, but are those similarities compelling enough to say this is just 2011 all over again?
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