5 Consumer Discretionary Funds To Buy On A Spending Splurge

Consumer spending levels increased at the fastest pace in eight months this January. Not only consumers bought big ticket items like cars and houses but they also ramped up purchases of a range of goods that include other discretionary products. Rise in wages, decline in the jobless rate, cheap gasoline price and winter thaw helped spending levels to move north.

Given the loosening of purse strings, investing in funds from the consumer discretionary sector may prove to be profitable as a major part of consumer expenditures go to this sector. What is more encouraging, income levels rose in January for the tenth straight month. This shows that consumers are in a position to spend more in the coming months.

Consumer Expenditure Climbs in January

The Commerce Department on Feb 26 reported that personal spending increased 0.5% in January. The rise exceeded the consensus estimate of a rise by 0.3%.

Moreover, a price index of consumer spending level went up in January. The personal consumption expenditures (PCE) index, in the 12 months through January, advanced 1.3%, the highest increase since Oct 2014. The core-PCE index that excludes food and energy prices also rose 1.7% in the 12 months through January, the largest increase since Jul 2014.

Telltale Signs of Consumption Pickup

Retail sales are off to a good start this year, indicating strength in consumer spending. The Commerce Department said on Friday that sales at retail stores rose 0.2% in January. Consumers mostly bought big ticket items while online store sales also moved north. The so-called core retail sales figure that excludes automobiles, gasoline, building materials and food services also increased 0.6% in January following a decline of 0.3% in December.

Car sales too spiked in January. At a seasonally adjusted annualized rate (“SAAR”), car sales increased to 17.55 million units in Jan 2016 from 17.32 million units in Dec 2015, the highest SAAR for any January since 2006. Moreover, existing home sales for January hit the highest level since last July. Existing home sales increased 0.4% in January to a seasonally adjusted annual pace of 5.47 million.