With Expectations So Low, Economy Starts to Look Good

After months of disappointing financial markets, U.S. economic data may actually start to look better than Wall Street expects.

The first glimpse of that may be showing up in Citigroup’s economic surprise index, which has started to turn up and is watched by analysts as a sign of possible market turns.

The widely followed metric, put together by the FX Quantitative Research group at Citigroup [C  27.13    -0.01  (-0.04%)   ], tracks data versus economists’  expectations.

With 1.5 percent gross domestic product (explain this) growth last quarter, it’s hard to say there are any rosy forecasts out there, but economists may have become so grim that they now could be too negative.

“It’s been coincident with turning points, certainly over the last two summers,” said Andrew Burkly, equity strategist with Brown Brothers Harriman.

“It led the downturn certainly last spring and this spring. It’s just an expectations thing,” he said. “What’s driven the market is the growth acceleration, growth deceleration. That kind of ebb and flow is followed by that measure.”

Burkly said he is cautious on the market and does not trust the recent rally, which has been led by defensives. But he sees the Citi index as one bright spot. 

Read more: http://www.cnbc.com/id/48423920