Retail Sales Jump, But Some Analysts Are Skeptical

While retail sales soared 17.7% from April to May, some underlying economic fundamentals are still painting a different picture of the recovery following the coronavirus pandemic. As such, some analysts are skeptical of the data.

With the federal government stepping in to provide much-needed stimulus, the retail sales number could be a reflection of too much optimism in an economy that’s still facing recessionary pressure. Namely, the high unemployment number could be a cause for concern.

“But analysts caution that some of the gains thus far probably reflect the impact of temporary government aid and expanded unemployment benefits in the face of a deep recession,” a Fox Business report noted. “The jobless rate is a historically high 13.3% by the government’s standard measure and an even worse 21.2% by the broadest gauge of unemployment. For now, Americans are spending disproportionately more on essentials and less on luxuries.”

“Our wants and our needs have changed permanently until we find a health fix,” said Stacy Widlitz, president of SW Retail Advisors, a retail consultancy. “Shoppers are focusing on comfort, home, and well-being.”

Nonetheless, popular retail exchange-traded fund (ETF) names traded higher on Tuesday, such as the SPDR S&P Retail ETF (XRT)Amplify Online Retail ETF (IBUY) and VanEck Vectors Retail ETF (RTH). XRT was up 3%, IBUY rose 2% and RTH went 2.74% higher.

Tracking Consumer Trends with this ETF

As more consumers are looking online to purchase goods and services with the economy reopening, various ETFs are poised to take advantage, such as the Goldman Sachs Motif New Age Consumer ETF (GBUY). The fund holds familiar names like Amazon and China powerhouses like Alibaba Group.

GBUY seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Motif New Age Consumer Index. The fund seeks to achieve its investment objective by investing at least 80% of its assets in securities included in its underlying index.

The index is designed to deliver exposure to companies with common equity securities listed on exchanges in certain developed markets that may benefit from the on-going structural shifts in the consumer market due to changes in demographics, technology, and preferences (the “New Age Consumer Theme”).

The index seeks to “track bespoke indices created by Motif, an industry leader in applying data science and automation to thematic investing. Motif analyzes traditional and alternative data and weights companies by a function of ‘thematic beta’ to provide precise exposure to theme,” according to the Goldman Sachs website.

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