According to Philadelphia Fed’s quarterly economist survey issued today, consensus growth estimate for Q2 is raised to 3.3%, up from 3.0% and growth in 2H-14 is also increased.
What’s the point? Recent consensus has been that the economy should accelerate in 2014. We think that is still the case, primarily reflected in recent stronger employment growth data. However, over the past week, we have seen increased investor concerns that economic growth will be less robust than earlier expected. The reasons for this are weak Eurozone economic data (0.2% growth in Q1) and increased concerns over slower growth in China. As a result, there has been some movement into bonds and out of stocks. If growth is in fact slower than expected, we think stock market downside is probably limited due to valuation, which remains reasonable, and continued investor demand for quality dividend-paying stocks.
Link: http://money.msn.com/business-news/article.aspx?feed=OBR&date=20140516&id=17626488