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Strategies & Market Trends : Bob Brinker: Market Savant & Radio Host -- Ignore unavailable to you. Want to Upgrade?

To: Jeffrey D who wrote (8796)	11/30/1998 3:45:00 PM
From: Jeffrey D	Read Replies (1) \| Respond to of 42834

See the following on 1999 growth in Europe. Expected good news for U.S. growth in 1999 but better is expected across the Atlantic. I know Bob has discussed what he believed to be a proper allocation percentage of European exposure in ones portfolio but I can't recall it at the moment. He has also discussed {recommended?} mutual funds focusing on Europe. Can anyone out there help me on this before I have to go to the archives to try and find the information? Thanks in advance. Jeff STUDY: EUROPE COULD OVERTAKE U.S. AS WORLD'S GROWTH LEADER -------------------------------------------------------------------------------- New York-Nov. 30-FWN--EUROPE COULD OVERTAKE THE UNITED States as the world's economic growth leader next year, according to a report by The Conference Board. While the U.S. economy will continue to grow by a healthy 3.5% in 1999, labor costs, profit pressures and interest rates could hinder U.S. growth later in the year. Gail D. Fosler, senior vice president and chief economist of the Conference Board, said: "The U.S. will continue to perform very well, but fatigue is setting in as labor costs rise and interest rates return to more normal levels. The U.S. economy is not exactly peaking, but rather running along a ridge of high performance spurred by interest rates that are lower than they should be given the cyclical stage of the economy." But Europe is still in the early stages of expansion, with substantial unused capacity and significant productivity gains likely. Europe also enjoys lower short- term interest rates than the U.S., with long-term rates at or below U.S. levels. Interest rates and falling fiscal deficits are both important cyclical forces spurring European growth. Changes in economic structure also support European growth. The European economy is drifting away from manufacturing toward services. Service sector growth is important to overall economic growth because it offers opportunities for job creation to offset job loss in mature sectors like manufacturing. Service sector productivity, as measured by value added per worker, is also often lower than in manufacturing, producing correspondingly greater employment benefits from service sector growth. If the European service sector were to rise to 50% of all employment by 1999, Europe could add another 4 million jobs. A key issue is whether the European economy can shift more rapidly into services to generate new jobs. Between 1989 and 1997, manufacturing lost 4 million jobs and private services gained 5 million. In the U.S., the comparable figures are 1 million jobs lost vs. a gain of 19 million jobs. "The important question is whether the euro is likely to spur the development of the service sector," said Fosler. "Compared to the U.S., where the private service sector accounts for 73% of gross domestic product and 80% of employment, the European service sector has just broken 50% of GDP and was only 45% of total employment in 1996."