The U.S. economy is chugging along and retail sales numbers are in a three month uptrend. The rise in consumer discretionary spending, along with related exchange traded funds (ETFs), may be the beginnings of a sustainable U.S. recovery.
The drop in auto sales, which fell by 5.1%, hindered overall sales growth in April as compared to March, report Lucia Mutikani, Richard Leong and Wanfeng Zhou for Reuters. Some analysts belive that the early Easter may have increased apparel sales in March and pushed smaller gains in April. Consumers also took advantage of the “cash for appliances” programs, which increased demand for electronics and appliances.
Core retail sales – the numbers most closely linked with consumer spending component of the government’s GPD report – are widely expected to have inched up further in April. The people at Reuters believe that Treasury prices will likely react to the sales data and the U.S. dollar may appreciate on expectations that the Fed would raise rates sooner as a result of a stronger economy.
Ed Farrell, a director of the Consumer Reports National Research Center, believes that the modest improvements in the Consumer Reports Index indicates consumers are coming out of their recessionary mindset, “but a full recovery will require a substantial period of growth for consumer confidence to fully take hold,” reports Marc Perton for The Consumerist.
The personal financial status of American consumers is on the rise – the Employment Index is at 50.6, up from 50.4 the prior month. Coming down from 63.5 in April to 53.0, the Consumer Reports Trouble Tracker Index showed a great improvement as fewer people faced problems paying bills.
Overall, U.S. retail sales are up and industrial production is clamoring ahead, according to reports out today. Consumers also grew slightly more confident early this month, adding to the string of upbeat data on Friday, despite the worries about Europe’s debt, reports John Parry for Reuters. The Thomson Reuters/University of Michigan’s Surveys of Consumers’ sentiment index rose to 73.3 in May from 72.2 in April, a touch below market expectations for 73.5.
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- SPDR S&P Retail (NYSEArca: XRT)
- Consumer Discretionary Select Sector SPDR (NYSEArca: XLY)
- Vanguard Consumer Discretionary ETF (NYSEArca: VCR)
“Max Chen Contributed to this article.”