Sam Stovall, U.S. equity strategist for S&P Capital IQ, argues that the consumer discretionary sector will benefit from the improving employment numbers and could face limited impact from the incremental Fed fund rate hikes. Additionally, Standard & Poor’s Economics anticipates consumer spending to rise 3.3% in 2016 after a 3.1% increase in 2015. Meanwhile, the U.S. consumer sentiment index rose to 92.1 in mid-October, compared to September’s 87.2 reading. [Strong Finish Seen for Consumer Discretionary ETFs]
There are some catalysts for discretionary ETFs, such as XLY, including the rising minimum wage. Meanwhile, a growing segment of America is calling for higher minimum wages across the government after years of stalled efforts. The national minimum wage has been set at $7.25 per hour since 2009, and changes would require the support of the Republican-controlled Congress.
A number of research has pointed to improved economic conditions from higher wages. For instance, in a 2011 study by the Chicago Federal Reserve, the author found that for ever dollar increase in minimum wage, a worker’s household added $2,800 in new consumer spending over the following year.
Consumer Discretionary Select Sector SPDR
