US Consumer Riding High

• Economic slowing may be offset by its secondary effects — lower energy costs and interest rates.
• Facts about consumer behavior could justify optimism about US growth.
• US consumers alone represent the biggest economy in the world.

While I was traveling in Michigan and Minnesota last week, several things became apparent to me. Concerns about the economic slowdown in China and the rest of the world are real, but I also saw signs that these fears may be overpowered by a true sense of life improving in the United States.

Rising Fortunes of US Consumers

The latest reports on retail sales have been disappointing.
But I’m still optimistic about the health of US consumers.
I expect consumer spending to sustain this business cycle.

During the first quarter of 2015, the list of economic worries has been long — slow business investment, subpar production growth in many sectors, weaker trade and central bank–driven currency dislocations, just to name a few. On top of that, financial pundits have been writing off US consumers, repeatedly describing them as overstretched, hobbled by low wages and too much debt, and discouraged about job prospects.

Market Insights 2015

Collaboration is part of the culture here at MFS and a key component of what drives our long-term approach to investing. Last week my colleagues Bill Adams and Kevin Beatty joined me to present our Market Insights webcast. At the beginning of 2015, Bill will be taking on the new role of Chief Investment Officer for Global Fixed Income and Kevin will become our first Chief Investment Officer for Global Equities.

During the webcast, we explored the economic, fixed income and equity trends that we think will drive the markets in the new year. Here are some highlights.