While Fed worries build, economy builds strength

There's a real shot the U.S. could grow faster than 2% to 2.5% in 2015.

Robert Johnson, CFA 8 September, 2015 | 5:00PM

It was yet another tough week for financial markets with a lot of red ink across the board. Most developed equity markets were down around 3% to 4%. Emerging markets and China-dependent markets overall were down closer to 5%.

A lot of emerging markets' damage occurred on Monday, when a pair of purchasing manager reports out of China was soft. To many of our readers, weakness in the Chinese manufacturing sector is anything but new. Still, the relentless flow of modestly weaker economic data, combined with poorly performing equity markets and the general belief that the Chinese government has lost control of the situation, raised concerns around the world.

Although China is indeed the world's second-largest economy, we believe that investors are overestimating China's impact on world economies, especially developed ones. China is less than 1% of U.S. GDP, 3% of Germany's, and just 6% and 2% of China poster children Australia and Brazil, according to data from Morningstar's Daniel Rohr, CFA, director of our basic materials team.

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Robert Johnson, CFA

Robert Johnson, CFA  Robert Johnson, CFA, is director of economic analysis for Morningstar.