It’s time to face the fact that the U.S. economy is melting, so what is an investor in exchange traded funds (ETFs) to do? Sure, the Federal government is planning to introduce a stimulus package in hopes of turning our economy around, but will the long-term effect remain?
Trang Ho for Investor’s Business Daily reports that under the outlined plan, low-to-middle income folks would get a tax rebate from Uncle Sam of anywhere between $300-$1200, and more if they have kids. Business would get $50 billion in tax cuts, pumping a total of around $150 billion into the economy.
Bill Greiner for UMB Asset Management remarks that government economic stimulus packages have only short-term effects, and only enlarges the problem of government spending and debt.
After the six-and twelve-month period of an intermeeting rate cut by the Federal Reserve, the consumer staples sector held up with returns of 8.4% and 17.2%, in contrast to the S&P’s returns of 5% and 8%. Consumer staples ETFs are a good place to be during these sparse times. After all, no matter how tough times are, you don’t stop needing toilet paper.
- Retail HOLDRs (RTH)
- iShares Dow Jones U.S. Consumer Services Index (IYC)
- iShares Dow Jones U.S. Consumer Goods Index (IYK)
- Vanguard Consumer Staples (VDC)
- Consumer Staples Select Sector SPDR (XLP)
Meanwhile, Eileen Alt Powell for the Associated Press reported today that consumer confidence tumbled in January. The Consumer Confidence Index fell to 87.9, almost what it was in November, at 87.8. The data, however, was gathered before the Federal Reserve cut rates on Jan. 22.
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.