An interesting split is happening in the American economy.
One of the big reasons that today’s GDP missed the whisper number was the downward revision in services spending.
Nomura specifies the dismal numbers:
The third estimate of Q4 GDP stayed at 3.0%, surprisingly weaker than we had expected (Nomura : 3.5%, Consensus: 3.0%). The big miss was primarily caused by weaker-than-expected services consumption which was revised down to +0.4% q-o-q ar compared with 0.7% in the previous estimate. Health care spending, which incorporated the results of the Quarterly Services Survey, was reported to be revised up, as we expected. The surprise came in downward revisions to transportation, financial and recreation services, offsetting the positive impact of greater health care spending.
+0.4% on services spending? That’s extremely weak in a quarter that grew 3.0%.
On the other hand, retail continues to look very nice.
One decent proxy for retail is the XRT ETF. That continues to show incredible strength.
Photo: Yahoo Finance
Meanwhile, the ICSC-Goldman retail sales index shows solid 3% annual growth.
So there’s a retail-services split in the US economy.