Confident Consumers To Drive U.S. Economy: 5 Picks

­­­­­­American households seem to be confident about the economy encouraged by the U.S.-China phase one trade deal, a stellar market and the lowest unemployment rate in 50 years. And as consumers continue to remain confident about their well-being, and continue spending, it would be prudent to invest in stocks that are poised to grow as consumer spending increases.

Strength in Job Market Boosts Consumer Confidence

On Jan 28, the Conference Board reported that consumer confidence index rose to 131.6 in January beating the consensus estimate of 128.8. Additionally, the board reported that December 2019’s figure was revised from 126.5 to 128.2. Per the report, the reading is the strongest since August 2019.

Consumers were found more optimistic about the short-term outlook, and consumers expecting business conditions to worsen declined to 8.4% from 8.8%. The labor market came up with the most upbeat results, as Americans are expecting more jobs in the near term. The percentage increased from 15.5% to 17.2%.

Lynn Franco, Senior Director, Economic Indicators, at The Conference Board in his statement specified that the growth in consumer confidence was “driven primarily by a more positive assessment of the current job market and increased optimism about future job prospects.”

And why not? The unemployment rate in the United States was 3.5% at the end of 2019, the lowest level since the late 1960s. This makes American households secured about their jobs and short-term job prospects high as companies keep complaining about shortage of skilled workers.

The consumer confidence survey is closely followed to analyze the purchasing trend of American households that accounts for 70% of economic activity. The stronger-than-expected results indicate that upbeat job prospects help U.S. consumers to spend more cash, which in turn will help the economy soar.

5 Stocks to Buy

The consumer discretionary sector is positioned to benefit from this stellar reading on confidence level, as spending grows across consumer-centric companies like household appliances, retailers, entertainment providers, jewelry retailers and cruise line operators. Hence, we have shortlisted stocks that flaunt a Zacks Rank #1 (Strong Buy). You can see Original post

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Written By: Zacks Investment Research