Keeping Score

We shot a 97 on a par-64 municipal track this week. Like Mark Twain’s assessment of Wagner, It was better than it sounds. Really.

In fact, we cut 10 strokes off that in a later round – the first time we have broken 90 – by somehow eliminating enough three-, four- and, yes, even five-putts. Mirabile dictu! It's true! Drive for show and putt for dough.

Likewise, the U.S. economy's game won't be mistaken for one of Bubba Watson's Homeric drives, but the advance estimate of first-quarter gross domestic product showed that efficient work by the 14^th club in the bag kept e pluribus unum in the hunt.

The Commerce Department reported Thursday that real GDP advanced at a seasonally adjusted annual rate of 2.2% in the first three months of 2012, down from a 3.0% rate in the fourth quarter of 2011. Business investment and inventories were the big subtracting factors. But the big dog, the consumer, overcame those drags. Final consumption charged ahead at a 2.9% rate, adding two points to growth, up from 2.1% in the fourth quarter. It was the biggest contribution to expansion since the final months of 2010.

In all, the data buttressed our view that the U.S. has reached escape velocity and won't veer into a double-dip recession, like Europe appears to be doing. Indeed, the U.S. is once again the hope of the world. The American consumer is crucial to Europe and Asia, lands that depend on America's appetite for goods ranging from German cars to Chinese T-shirts. The increase in consumption should also translate into more investment and inventory building on these shores in the months to come.

The stock market responded, shrugging off the headline number, helped, obviously, by sterling earnings reports from Apple and Ford. Fully 71% of companies comprising the S&P 500 that have so far reported first-quarter results beat analysts' mean estimates, according to Bloomberg News.

Barring unforecastable cataclysms, we expect the rally to continue. The S&P 500 is trading at a trailing 12-months price-to-earnings ratio of about 16, compared with a historical mean of about 15, according to the Wall Street Journal. We expect the “P” to grow as the “E” keeps swelling in a growing economy. As in our historic breaching of the 90 threshold, momentum is serious scorecard medicine.