Strong domestic macroeconomic indicators may point to a jolly holiday shopping season and a favorable outlook for consumer sector-specific ETFs.

Unemployment levels are near four decade lows and a consumer confidence reading is at a 20-year high, illustrating a consumer backdrop that is the best it has been in decades, CNBC reports.

Last year was the best holiday shopping season in three years for companies, and Matthew Boss, J.P. Morgan’s equity research analyst focusing on retailing, argued that the strengthening U.S. consumer as the year progressed could bode well for sales this year as well.

“Management teams are telling us consumers are trading up within stores, particularly in department stores. Discounting is reduced. We think the consumer is really showing a trade-up dynamic and that will be key to this holiday season,” Boss told CNBC. “National brands, name brands, will be able to do full price selling rather than mark-down. Retailers can win on the top line and margins.”

Industry-wide volatility could continue

However, potential investors should keep in mind that volatility remains an ongoing risk. Boss warned that company-specific and industry-wide volatility could continue.

The most glaring macroeconomic overhang continues to be the trade war between the U.S. and China.

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