U.S. Consumer Spending Bolsters Economic Growth: 5 Picks
Zacks Investment Research | Dec 22, 2019 11:04PM ET
American consumers continue to splurge, a tell-tale sign that the economy is growing at a steady pace. And as consumers continue to remain confident about their well-being, it seems prudent to invest in stocks that are poised to grow on rising consumer spend.
Consumer Spending Rose in November
On Dec 20, the Commerce Department reported that consumer spending rose 0.4% at an annualized rate in November, the best rise since July. American households have been spending heavily on motor vehicles and healthcare.
October’s consumer spending in the meantime remained unchanged. Consumer spending accounts for 70% of economic activity in the United States and has been holding up steady despite the lack of change in retail sales data of late. What primarily support consumer outlays are the 50-year low unemployment rate and a steady rise in wages.
In fact, personal income rose 0.5% in November after rising slight 0.1% (revised) in October and beating the consensus estimate of a 0.3% rise. Moreover, growth in income was the strongest since August. This is evident from the 266,000 job addition in November — the highest since January.
U.S. GDP grew at an annual rate of 2.1% in the third quarter, backed by healthy consumer spending. The resilience of consumers has helped the economy expand for 11 years at a stretch.
Buy These 5 Stocks Now
Further, on Dec 20, the University of Michigan’s consumer sentiment rose to 99.3 for December. This reading is higher than November’s final reading of 96.8, beating the consensus of 99.1, suggesting that consumer spending will rise in the near term.
Given the developments in the U.S. economy, we expect American consumers to help the economy expand. Hence, we have selected five stocks from the motor vehicles and healthcare space where consumers have spent the maximum. These stocks flaunt a Zacks Rank #1 (Strong Buy).You can see Zacks Investment Research
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