The U.S. economy is accelerating.
It's crystal clear. Recent data shows an optimistic U.S. consumer that will bolster economic growth through the fourth quarter of 2016.
(Note: Consumer spending makes up 70% of GDP so the buoyancy displayed in recent economic data releases is material to fourth quarter GDP.)
The most recent sign of economic optimism was yesterday's ISM Services number. As you can see in the Chart of the Day below, ISM Services for the month of November hit a 14-month high accelerating +2.4 points to 57.2. (The way this index is constructed, anything over 50 is expansionary.) Within the release, Business Activity ramped to 61.7 and Employment popped to 58.2.
Here's a brief recap of other economic data points supportive of a rosy U.S. economy heading into the fourth quarter:
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Consumer Confidence: The Conference Board’s November reading of 107.1, reported last week, was +8.6% higher than the October reading of 98.6. That’s a new cycle and YTD high!
- Durable Goods: The headline number was up a big time (+4.8% sequentially) and up +2.1% year-over-year (data released two weeks ago).
- Retail Sales: the retail sales “control group” (a good proxy for what goes into GDP) came in at +4.2% quarter-over-quarter growth rate (data released three weeks ago).
All of this has bolstered U.S. markets. In the past month, the Russell 2000 is up +16.3%.
Bottom Line
The U.S. economy is accelerating. Don't fight the data.
