Our analysis of recent data leads us to conclude that the U.S. economy is healthy and consumers are still leading the way. Based on the second update to 4Q GDP from the Bureau of Economic Analysis, personal consumption expenditures (PCE) contributed 2.0 points of the 3.2% increase in GDP, which was revised down from 3.3% in the first estimate. Within PCE, the huge services category was a standout, contributing 1.28 points to GDP. PCE represented 69%, or $15.6 trillion of the fourth quarter's $22.7 trillion GDP. Services represented $10.1 trillion or 45% of total GDP. Our 2024 GDP forecast is for 2.0% growth. We expect 1Q to be up 2.3%. We expect 2Q to be the weakest of 2024, with 1.3% growth ramping to 1.8% in 3Q and 2.3% in 4Q. In February, economists in the Federal Reserve Bank of Philadelphia's Survey of Professional Forecasters expected GDP to rise 2.4% in 2024, with 1Q up 2.1%, 2Q and 3Q each up 1.5%, and 4Q up 1.7%. On March 1, the Atlanta Fed's GDPNow model estimated 1Q24 growth of 2.1%. Our 2024 forecast assumes inflation continues to fall and the Fed has completed its rate-hike campaign, with monetary easing likely to begin in the middle of the year. In recent data, we have seen that January's job market was much stronger than we expected, while post-holiday retail sales were weaker than we anticipated. Walmart said, in its 4Q earnings call, that its customers are resilient but looking for value. WMT is seeing less inflation and hopefully setting a trend of passing the savings on to customers. WMT has reduced the prices of key items. While economic growth may be uneven in 2024 and into 2025, we believe the Fed has the ability to bolster growth if it falters badly. Our early forecast is for GDP to grow 2.0% in 2025. We expect the Fed will be close to meeting its dual mandate, with inflation near 2% and unemployment at approximately 4.1%.

Walmart serves as the preeminent retailer in the United States, with its strategy predicated on superior operating efficiency and offering the lowest priced goods to consumers to drive robust store traffic and product turnover. Walmart augmented its low-price business strategy by offering a convenient one-stop shopping destination with the opening of its first supercenter in 1988. Today, Walmart operates over 4,600 stores in the United States (5,200 including Sam’s Club) and over 10,000 stores globally. Walmart generated over $440 billion in domestic namesake sales in fiscal 2024, with Sam’s Club contributing another $86 billion to the firm’s top line. Internationally, Walmart generated $115 billion in sales. The company serves around 240 million customers globally each week.

Walmart is the world's largest retailer. In the fiscal year ended January 31, 2024, revenues were $648 billion (compared with Amazon's $574 billion of total revenue). The company has three segments: Walmart Stores, which accounted for about 68% of sales; Sam's Club, a membership warehouse chain, which comprised 13% of revenue; and the International segment, which generated 19% of sales. The company, based in Bentonville, Arkansas, ended fiscal 2023 with about 10,600 retail units in 19 countries. The company had about 1.05 billion square feet. Groceries are the largest produce category in the U.S. market, at approximately 59% of sales. Health and Wellness, another stable category, is 11%. General Merchandise is 28% of sales. Global e-commerce sales were approximately $100 billion in FY24. The fiscal year ends on January 31 for U.S. and Canadian operations. Other operations generally are consolidated using a one-month lag on a calendar-year basis.

Stocks are trading lower on Wednesday morning ahead of the release of the Federal Reserve minutes. Turning to stocks, shares of Nvidia (NVDA) are down today, with the company reporting earnings today after market close. The S&P 500 fell 0.1%, the Dow was down $0.2% and the Nasdaq lost 0.5%. Crude oil traded near $77.50 per barrel, while gold fell nearly $4 to $2036 per ounce.