Monday, December 17, 2018

The Split Between the Market and the Economy

The American economy keeps humming along. Data released on Friday showed retail sales excluding autos and gasoline grew by 0.9 percent in November, on top of a revised 0.7 percent increase in October. That prompted the Atlanta Fed to raise its fourth-quarter GDP prediction to 3 percent from 2.4 percent.

On the other hand, the stock market isn't doing so well. After another dismal day on Wall Street on Friday, the &P 500 Index is now down by 10 percent for the fourth quarter.

The divergence between the economy and the market is getting to be historic. If the Fed predictor proves accurate and there is no Santa Claus rally on Wall Street, it’d be the first time since 2010 that the economy grew by 3 percent and the S&P 500 fell at least 10 percent in the same quarter.

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