U.S. households are expected to open up their wallets and save less in the months head, potentially spurring growth in the consumer sectors and discretionary-related exchange traded funds.
Consumer discretionary stocks have remained relatively flat in the past few weeks. Over the past month, the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) dipped 0.5%, First Trust Consumer Discretionary AlphaDEX Fund (NYSEArca: FXD) was down 0.5% and Vanguard Consumer Discretionary ETF (NYSEArca: VCR) was up 0.1%. [Taking Stock of a big Consumer Discretionary ETF]
However, things could pick up in the second half of the year. Jason Furman, chairman of the White House’s Council of Economic Advisers, argued that American consumers could spend more and save less ahead, reports Jeffrey Sparshott for the Wall Street Journal.
”I continue to think a lot of what was powering the economy last year was consumers,” Furman told the WSJ. “I continue to think that will be a good part of our economy. It’s taken a little longer to get going but we did start to see that in May.”
U.S. consumers, who make up 70% of the country’s economic output, have diminished their debt loads, are exhibiting rising confidence and are enjoying an income boost through lower energy prices. [Retail ETFs Could Pull Ahead in Second Half]
”I think we have not seen the full benefits of the decline in oil prices yet,” Furman added.
Additionally, while the savings rate spiked recently, Furman believed that consumers will eventually loosen their wallets and return to normal saving rates.