Word on the street is that the spending trend is once again resuming, but don’t necessarily believe everything you hear. Consumer discretionary spending is still at low levels, even among the high-income set, leaving targeted exchange traded funds (ETFs) lagging slightly.
Discretionary spending – the category of spending that usually focuses on “wants” instead of “needs” – is showing some lag. Now many upper-income families have adopted frugality as their new mantra. Data from the ETF Desk says that spending in upper income households, those making more than $90,000 a year, has fallen 13% from January and 19% from a year ago. [ETFs to Play the New Retail Climate.]
In order for a solid recovery in consumer spending to take shape, a turnaround in spending within this subset of spenders is needed. These are the spenders with the truly disposable income and access to credit. So, whatever the word on the street is, that fact remains that consumers are not spending the way they did pre-market meltdown. [As Auto Sales Rebound, Play It With This ETF.]
Retail spending did get a boost this morning, rising 0.3% in February from a month earlier. Economists had expected a decline by the same amount. More telling, perhaps, might be the consumer confidence figures, which showed a decline instead of an anticipated increase. Consumers are still feeling somewhat skittish as the job market remains uncertain, which means that values and bargains might still be the order of the day when all is said and done. [Can Luxury Withstand the Bargain-Hunters?]
For more stories about retail, visit our retail category.
- SPDR S&P Retail (NYSEArca: XRT)
- Consumer Discretionary Select Sector SPDR (NYSEArca: XLY)
- Vanguard Consumer Discretionary ETF (NYSEArca: VCR)
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.