Consumer spending became even weaker in August as back-to-school shopping failed to deliver a boost to the sector, even though retail exchange traded funds (ETFs) managed small gains for the month.

Spending was the weakest it’s been in six months as the boost from the economic stimulus package becomes just a fond memory, reports Martin Crutsinger for the Associated Press. Economists had been expecting a 0.2% gain, but instead it stayed flat.

It just goes to show that high fuel and food prices continue to leave consumers with less and less disposable income to throw around.

The holiday shopping season is fast-approaching (or if you’re freakishly organized, it’s already begun), but the general consensus appears to be that things won’t be much better for hard-hit retailers this season.

Most analysts seem to agree that the overall economy will slow significantly in the current quarter, and might even show no growth at all and go negative in the last quarter. If it does, it will meet the general definition of a recession.

Oil prices have been volatile lately, but overall appear to be losing steam. The downward path is continuing so far today, as oil has lost $8 and putting it below the $100 mark once again, reports Stevenson Jacobs for the Associated Press.

Much of the sell-off is attributed to the government’s $700 billion bailout plan. A final vote on the measure could happen as soon as Wednesday, but investors appear doubtful as to whether the plan is actually going to work.

  • United States Oil (USO): up 13.8% year-to-date
  • Consumer Discretionary SPDR (XLY): down 10.1% year-to-date; up 8% in August
  • Vanguard Consumer Staples (VDC): down 2.3% year-to-date; up 2.7% in August
  • SPDR S&P Retail (XRT): down 3.2% year-to-date; up 6.6% in August
  • Consumer Staples Select Sector SPDR (XLP): down 2.9% year-to-date; up 2.9% in August

Retail, Oil, Energy Exchange Traded Funds (ETFs)

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.