The series in the chart above is the 3 month moving average of the monthly percent change in Real Personal Expenditures on Services (click to enlarge).Note that during the recent downturn and the following recovery it has stayed below the prior range from 1995 to 2007 (delimited by the horizontal red line). The weakness of this big part of the US economy is not a secret to anyone.
Can the series speed up? I do not think so. The range during previous recoveries and expansions was roughly 0.3 percentage points. If this time is no different we are close to the top of the range. I have also drawn a trendline on the chart (blue arrow) for the technical analysis fanatics. It will be reached in the coming months, supporting the scenario that there is not much upside left.
Looking at the ISM Non Manufacturing Business Activity Index we can also see that this is about as good as it gets:
On the bright side, recently the series broke above the 0.1 level that had been containing it (green circle). This reflects some strength that was also apparent from the GDP report, suggesting we could see a positive surprise in the ISM Non Manufacturing number today that could move the market higher.
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