Will Consumer Spending Impact Consumer Goods ETFs?

Consumer goods-related exchange traded funds (ETFs) did not like the news released late last week that the durable goods report for August had the largest monthly drop since January. New orders for manufactured durable goods fell 5.9%, says James Picerno for The Capital Spectator. However, when looking at the latest durable goods report in a historical framework, it doesn’t look quite as bad.

Consumer spending in August rose 0.6%, the fastest growth in more than two years. However, the rise in consumer spending does not change the fact that the year-over-year trend has been down for 2007. This strong economic news has investors concerned that there might not be another rate cut by the Federal Reserve.

Some consumer goods-related ETFS and their year-to-date performance include:

• iShares S&P Global Consumer Discretionary Sector Index (RXI) – up 1.9%
• iShares Dow Jones U.S. Consumer Goods (IYK) – up 7.7%
• PowerShares FTSE RAFI Consumer Goods (PRFG) – up 7.8%