“Wages are up. Employment is up. Interest rates are low. So it’s really a very good economic time for consumers,” Paul Hogan, a portfolio manager and analyst at Fenimore Asset Management, told the WSJ.
Related: 4 Consumer Discretionary ETFs if Spending Keeps Going
The strength in the retail sector this year is a stark contrast in previous years when investors grew concerned over the future outlook of traditional brick-and-mortar stores in face of a rising competition from e-commerce or internet retailers, like Amazon (NasdaqGS: AMZN). For instance, TGT shares plunged 9.7% in 2017, marking its third consecutive year of declines, despite the broad U.S. market rally.
In 2018, though, many brands are being supported by American’s willingness to spend money. Retail sales in July increased by 6.4% year-over-year, indicating U.S. consumers are spending at a much faster pace than inflation due to confidence in the strong economy and recent tax cuts. Meanwhile, the strong labor market has also provided households with more cash to spend.
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