3 Mutual Funds To Ride The Surge In Consumer Spending

Consumer spending rose to a six-year high, with leisure goods accounting for most of the purchases. Further, moderate levels of inflation, increase in stock prices and an upbeat labor market have also given a boost to spending on consumer discretionary goods.

Robust economic conditions and near full-employment propelled consumers’ confidence to near an all-time high in January. Further, such confidence underpins the purchasing power of a consumer and boosts economic growth. Such encouraging economic conditions calls for building positions in mutual funds invested in leisure, discretionary and transportation stocks.

Consumer Spending at a 6-Year High

Consumer spending in the United States surged to its highest level since 2011 in December. The measure of household spending rallied 0.4% last month. However, such a surge took a toll on individual savings because consumers paid for their purchases using the savings. The savings rate declined to its lowest levels in 12 years to 2.4%. Survey also showed that consumers spent heavily on leisure goods such as new cars and trucks.

The last three months of 2017 witnessed a surge in the propensity to spend by an average American, hitting its fastest pace of growth in as many as two years. Moreover, the unemployment rate, which is at 4.1% and an overall burgeoning economy also boosted consumer spending. The trend of increase in spending on leisure goods also mean that Americans would spend more on traveling, which will have a positive impact on transportation stocks.

Consumer Confidence Lingering Near its 17-Year High

Consumer confidence rose to a near 17-year high in January to 125.4, higher than the consensus estimate of 122.5. The index measures the confidence that an average American has on the current economic scenario and their outlook of the same in the next six months. Such a surge follows a decline in December.

Robust economic conditions and near full-employment pushed up the confidence level. This further strengthens the purchasing power of a consumer and helps support economic growth.