Recent announcements on manufacturing activity, household income and employment have made it painfully clear that the US economy is struggling. For investors, however, the relatively arcane debate over whether we are in a recession or not is largely irrelevant. Today’s stock prices discount future expectations, and it is the extent to which reality ends up exceeding or falling short of those expectations that drives future stock performance.

In tackling the more relevant question – “where does the economy go from here?” – I should point out that I don’t usually spend much time on macroeconomic forecasting. It is difficult to get right and generally my time is more productively spent focusing on a bottom-up analysis of individual companies’ prospects. If one takes the long-term view that the US economy is resilient and will continue to grow over time – as I do – it is the company-by-company calls that will determine investing success or failure.