“I’m not going to sound like Pollyanna because I am aware of problems around us,” but there are favorable signs, Jerry Webman, chief economist at OppenheimerFunds Inc., said during the firm’s webinar, “It’s Better Than You Think.” These signs include a recovery of the housing market, more job openings, an increase in U.S. crude oil production and debt stabilization.
Although the housing market has not recovered to pre-financial crisis levels, Webman said the deleveraging situation looks more promising. “The U.S. consumer isn’t in bad shape from a liability point of view,” Webman said. “I think we’re closer to the end of the deleveraging process than we are the beginning.”
Housing prices, sales and starts are all up from 2009 levels, he added. The employment situation is also improving, with 6.3 million jobs gained from 2011 to 2013 (U.S. employees on non-farm payrolls).
Emerging markets also look promising, with nearly all reading above 50 on the Manufacturing Purchasing Managers’ Index—a reading above 50 implies expansion. “We think there are a lot of good opportunities internationally,” said Art Steinmetz, executive vice president, chief investment officer and portfolio manager at Oppenheimer.
Steinmetz said alternative fixed-income strategies—real estate investment trusts (REITs), master limited partnerships (MLPs), emerging markets and leverage loans—can help outpace inflation. “Those are areas you should consider if you are trying to diversify your portfolio,” he said.