Consumer Confidence Soars: 5 Retail Stocks Poised To Benefit
Zacks Investment Research | Jan 30, 2018 08:10PM ET
Consumers, who are at the forefront of all economic activity, have been in the spotlight lately due to a positive economic backdrop with the stock markets surging, wages improving gradually, unemployment rate at a 17-year low, home prices rising and inflation remains modest. These were the main driving factors that led retailers to enjoy a heartening holiday season in a long time.
In fact, people continued to shop without hesitation this holiday season due to less fears about the future. This is well reflected in the 0.4% or $54.2 billion increase in consumer spending recorded in December, following a gain of 0.8% in November. Further, recent reports indicate that the optimism that built during the final months of 2017 has carried into January as consumers are no longer wary of shopping and the economy is taking the road uphill.
These positives further led to a rebound in consumer confidence, which gauges the consumers’ optimism on the economy expressed through savings and spending patterns. Per the Conference Board, Consumer Confidence Index showed a marked improvement in January, after witnessing a setback in December. Consumer Confidence rose 2.3 points to 125.4 in January, following a decline to 122.1 in December. Notably, the index rose to 129.5 in November, which was the highest mark since the increase to 132.6 recorded in November 2000.
The primary reason for the surge in the index is consumers’ belief that the pace of growth witnessed in the latter half of 2017 will continue in 2018. This has led consumers to use their savings to make purchases. This surely is a welcome sign for retailers, who are end-beneficiaries of the rising consumer spending and confidence.
How the Retail Sector Stands to Gain from Consumers’ Prosperity?
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