So, though there have been recent encouraging signs about economic growth, including better-than-expected home sales figures, slower consumer spending is likely to continue to drag down U.S. economic growth.
What does this mean for investors? Two implications were visible last week, when mixed economic data pushed both interest rates and the dollar lower. Until the economy demonstrates more consistent growth, yields are likely to remain low.
In addition, there is a third implication: continued weakness in consumer-related stocks, particularly discretionary companies. Despite what is shaping up to be a decent year for U.S. stocks overall, consumer discretionary companies continue to lag.
As such, I continue to advocate caution toward consumer-related segments of the market. You can read more about my sector outlooks in my latest Investment Directions monthly market commentary.
Sources: BlackRock, Bloomberg
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock and iShares Chief Global Investment Strategist. He is a regular contributor to The Blog and you can find more of his posts here.