While I have been and continue to be cautious on consumer-related sectors over the long term, for this holiday season the stars are aligning in a very positive way. A stronger labor market, some wage growth and higher wealth are translating into higher confidence. The University of Michigan Consumer Sentiment Index is now at 93.8, up from 80 in March and at the highest level since January 2007. Back in late October we upgraded our view of consumer discretionary companies from underweight to neutral. At least for the 2014 holiday season, the U.S. consumer is likely to recoup a bit of their old swagger.
Source: Bloomberg.
Russ Koesterich, CFA, is the Chief Investment Strategist for BlackRock. He is a regular contributor to The Blog and you can find more of his posts here.