It takes a licking but keeps on ticking: the U.S. economy shows no signs of altering the slow-but-steady economic growth path it’s been on for years now. More important, the healthy job-growth trend we’ve seen for two years remains in place. That’s true in spite of potential trainwrecks in Europe and Asia. Investors seem to agree on this interpretation of the data, which is why markets are behaving much differently now than they did in January.

Let’s examine what the indicators are telling us — and in part two of this article later this week, I’ll tell you what it means for our portfolios.

#-ad_banner-#​The U.S. Economy: The economy has been growing slowly but steadily for many years, but in the past year job growth picked up — a sign that employers have enough confidence in demand for their goods and services that they’re willing to increase capacity even if it means higher expenses. The U.S. economy has created at least 200,000 jobs in 21 of the 24 months since March 2014 — nothing like the gains we saw in the 1990s, but far better than the early years of the recovery. Job growth isn’t only in low-wage service sectors but also reflected in manufacturing, which grew a modest but notable 1.8% year over year through February 2016 — with the booming auto sector leading the way.

With unemployment at only 4.9%, most consumers have money in their pockets, at least for basics like housing, food and other staples. Other data shows that consumer debt has been paid down considerably from pre-crisis levels, leaving more middle-income Americans empowered to spend on new homes and other consumer discretionary goods and services, such as cars, major appliances, furniture, home improvement and leisure.

Overseas Economies: Unfortunately for those inclined toward bullishness, the economic climate overseas is darker. Europe is facing myriad challenges, from a major refugee crisis to continued tension over Greece to a potential exit of the U.K. from the European Union — which could lead to a wider breakup. Overall, Europe’s economy has grown more slowly than ours since the crisis; while U.S. GDP is up well over 10% during the past decade, Europe’s has barely gotten back to where it was pre-crisis even though policymakers have pulled every lever to spur lending and consumption.

China, the engine for global economic growth for much of the past 20 years, is slowing — inevitable, given its size, but distressing for those who counted on a permanent awakening for Asia’s sleeping giant. And when China catches a cold, the United States doesn’t necessarily sneeze — but it’s not helpful to us or other Asian economic powers. Brazil, another of the BRIC emerging markets, is in worse shape, grappling with political upheaval, policy mistakes and low energy prices. Other emerging markets also are slowing, though they continue to contribute positively to world GDP.

The bottom line here is that the U.S. economy remains in better shape than many other economies, a testament to its size and diversity, and the federal government’s decisive choices in the wake of the crisis.

Commodity Prices: In a major short-term trend shift, commodity prices have rallied considerably since mid-January. Brent Crude Oil, for example, is up about 40% from its lows. This is partly the result of long-term supply and demand dynamics: over the past 12 to 18 months, producers cut back on production in reaction to falling prices, and the lower supply is finally helping prices rally. But the market’s newfound faith in commodities also reflects an assessment that global economic growth is not collapsing and rather will remain positive. The great news is that even after rallying, commodities remain cheap for producers and consumers alike. Brent Crude remains about 40% below its 12-month high last May, and there’s little reason to expect it to regain that level any time soon. And that leads me to the next indicator…

Inflation: One of the keys to the economic recovery from the Great Recession, and continued global economic growth, has been the sustained run of little to no inflation, especially in the United States.

This long trend has occurred for several reasons. The most important is the long-term cyclical decline in commodity prices, resulting primarily from the oil and natural gas production boom in the United States (enabled by hydraulic fracturing, in the case of gas) and freer trade generally (enabling steel and mining commodities to be produced cheaply and sold anywhere). Higher production and access has allowed commodity prices to remain low despite rapidly rising demand from China and India in recent years.

The rebound in commodity prices from their short-term lows will push inflation a little higher this year, but it shouldn’t alter the long-term trend, especially given the slowdown in the growth of China and Brazil.

Interest Rates: Low inflation allows the Federal Reserve to keep interest rates at historic lows, attracting business and consumer borrowing. Low interest rates have helped the homebuilding industry recover, the auto industry surge and the consumer discretionary sector in general perform well. As long as inflation remains low, the Federal Reserve will feel little pressure to goose up short-term rates. With steady but slow growth and little evidence of inflation, the Federal Reserve may raise rates again this year, but I doubt we’ll see more than a total 50 to 75 basis point increase (0.5 to 0.75 percentage points), and quite likely not even that. As a result, industries that either borrow or benefit from borrowing should perform relatively well.

In Part Two of this article, I’ll look at specific industries that should thrive in this economic climate.

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