As houses are going down in value and unemployment is rising, exchange traded fund (ETF) investors have less money to spend in other areas. In fact, unemployment stats show it has risen from 4.5% to 4.7%, and that doesn’t include the whole picture, says Gary Gordon for ETF Expert. Earlier this week, the U.S. Commerce Department said housing starts and permits for future construction fell in September to a 14-year low, with a 10.2% drop in starts from August, reports Gertrude Chavez-Dreyfuss for Reuters. In turn, the dollar, which is already weak, dropped 0.2%. As one would imagine, this has only sent the homebuilding ETF SPDR S&P Homebuilders (XHB) down even further. Currently, it’s down 44.0% year-to-date. Ouch.

On top of all that bad news, we have another problem: Oil. It’s approaching $90 per barrel, which is a good 10% higher than post-Katrina. When more is spent at the pump, less can be spent shopping. Although retail sales seem to be holding their own for now, consumer ETFs such as the SPDR Select Consumer Discretionary (XLY) could start to feel the squeeze. Currently, it’s already down 2.6% year-to-date. However, more aggressive investors might look to profit from a dip in the consumer ETFs by researching the UltraShort Consumer Services ProShares (SCC). When the consumer sector drops, this ETF gains double the performance.

Tags: Homebuilders, Real Estate, Retail, Sector ETFs