Trump And Putin Steal The Show As Global Growth Surges

U.S. President-elect Donald Trump and Russian strongman Vladmir Putin are dominating the world stage, stealing the show as global economic growth is surging.

This past week, the German government reported that gross domestic product expanded 1.9% in 2016 in inflation-adjusted terms - the best growth rate since 2011, beating the German government's own forecast of 1.8% growth.

"The economic situation in Germany was characterized by solid and steady growth also in 2016," according to "first calculations" of the Federal Statistical Office of Germany. The price-adjusted gross domestic product (GDP) rose 1.9% on an annual average in 2016 over the previous year.

The German government said GDP growth was 1.7% in 2015 and 1.6% in 2014.

"Examining the longer-term economic growth reveals that growth in 2016 was by half a percentage point higher than the average of the last ten year growth rate of 1.4%," according to the Federal Republic of Germany.

The better than expected GDP report from Germany adds a new dimension to the positive economic surprises that have been occurring domestically in the U.S. since June 2016.

The surge in the Citigroup economic surprise index confirms a stream of better than expected reports on U.S. economic growth has repeatedly surprised economists, and this same trend recently has been evident in global economic reports.

"Looking at global purchasing managing data averaged on a quarterly basis for the eight broad sectors monitored, 2016 was marked by a general trend of strengthening expansion across many areas as the year progressed," says Markit, which compiles global economic growth data.

Five of the eight broad areas monitored by Markit registered their strongest quarter of growth for the year during the final three months of 2016, and the remaining three sectors achieved their second strongest rates of expansion.

The tech sector registered the strongest rise for the year, just ahead of financials and consumer goods. Consumer services and telecommunication services saw comparatively weak rates of expansion, while basic materials continued its recent recovery in growth following a prolonged period of weakness. A year ago exactly, the U.S. stock market was in the throes of a double-digit as fears that the low price of oil and materials would trigger a slowdown in growth globally, and fear was palpable worldwide.

The Standard & Poor's 500 index closed Friday at a 2,274.64, down a fraction for the week. The NASQAQ composite broke its record high price for the fourth consecutive day on Friday.

“Investors welcomed quarterly earnings from JPMorgan Chase, Bank of America and Wells Fargo, all of which reported results that exceeded Wall Street's expectations," Associated Press reported after Friday's close.

A drop in stock prices historically occurs every year or two. But past performance does not indicate future results. Investor ebullience is rooted in economic fundamentals. Evidence of a global expansion is increasing.

However, investors are fickle and could change their minds fast, particularly if something unexpected happens. Political, social, and other turmoil or some new crisis could shake confidence and send some investors to the sidelines anytime, and a correction of 10% or perhaps 20% is possible at any time.

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This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used by as financial advice without consulting a professional about your personal situation.

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