{"id":8707,"date":"2020-06-29T20:02:23","date_gmt":"2020-06-29T20:02:23","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=8707"},"modified":"2022-02-26T13:06:37","modified_gmt":"2022-02-26T13:06:37","slug":"consumer-spending-will-drive-economic-recovery","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/consumer-spending-will-drive-economic-recovery\/","title":{"rendered":"Consumer Spending Will Drive Economic Recovery"},"content":{"rendered":"\n<p>Many readers have probably seen this stat-line before: U.S. consumer\nspending accounts for roughly two-thirds of total GDP.<sup>1<\/sup> With U.S.\nGDP crossing $20 trillion in 2019, that means the consumer doled out\napproximately $13 trillion last year. As a category, that makes the U.S.\nconsumer nearly as big as <em>the entire Chinese\neconomy<\/em> (~$14 trillion) and is almost three times bigger than Japan\u2019s economy\n(~$5 trillion). <\/p>\n\n\n\n<p>The United States has exponentially more spending power than\nany other country in the world, and investors shouldn\u2019t underestimate the U.S.\nconsumer\u2019s ability to drive the recovery forward.<\/p>\n\n\n\n<p>To be fair, quite a lot hinges on people being able to\nreturn to work in the coming weeks and months, and it may take years for the\nlabor market to fully recover. But early data indicates that federal stimulus\nprograms \u2013 coupled with some pent-up demand established during the lockdown \u2013 have\nled to a stronger rebound in consumer spending than almost everyone\nanticipated. <\/p>\n\n\n\n<p>________________________________________________________________________<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2020_6_29&amp;content=stock_market_outlook_report\">Hard Data &amp; Economic Indicators You Should Keep an Eye On! <\/a><\/strong><\/p>\n\n\n\n<p>In addition to consumer spending data, there are additional\ndata points and economic indicators that you should pay attention to in this\nturbulent time. To help you focus on the hard data and other factors that could\nimpact your investments, I am offering\nall readers our just-released Stock Market Outlook report. This report contains\nsome of our key forecasts to consider such as:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>The economic\neffects of the COVID-19 pandemic <\/em><\/li><li><em>U.S. returns\nexpectations for 2020<\/em><\/li><li><em>Background on the\nU.S. fiscal stimulus program<\/em><\/li><li><em>Why you should be\ncareful in determining what S&amp;P 500 data to use<\/em><\/li><li><em>Zacks Rank\nS&amp;P 500 Sector Picks <\/em><\/li><li><em>Status of global\nenergy markets<\/em><\/li><li><em>What produces\n2020 optimism?&nbsp; <\/em><\/li><li><em>And much more<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!\u00a0<br> <br> <strong>IT&#8217;S FREE. <a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2020_6_29&amp;content=stock_market_outlook_report\">Download the Just-Released July 2020 Stock Market Outlook<\/a><\/strong><sup>2<\/sup><\/p>\n\n\n\n<p>__________________________________________________________________________<\/p>\n\n\n\n<p>It may be difficult to fathom, but real personal incomes in\nAmerica actually went <em>up<\/em> during the\nmonth of April (14% year-over-year), as IRS payments and super-charged\nunemployment benefits hit millions of mailboxes and bank accounts. &nbsp;&nbsp;&nbsp;<\/p>\n\n\n\n<p><strong>Real Personal Income Jumped in\nApril<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/image-1-of-4-1024x395.png\" alt=\"\" class=\"wp-image-8708\"\/><figcaption> <strong><em>Source: Federal Reserve Bank of St. Louis<sup>3<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n<p>This\nincome boost is temporary, of course, but it\u2019s proven to be effective. Advance\nreal retail and food services sales saw a jump in April and May, creating a\n\u201cv-shaped\u201d bounce from the record lows experienced during lockdowns. A\nsignificant portion of spending came from online shopping, accelerating a trend\nto e-commerce that has been underway for years now. Walmart\u2019s online sales\nsoared +74% in the first quarter, posting its highest sales growth on record in\ne-commerce. Amazon enjoyed a similar tailwind, with net sales from online\nshopping hitting $36.7 in Q1 \u2013 a +25% year-over-year increase.<sup>4<\/sup>&nbsp; <\/p>\n\n\n\n<p><strong>The Consumer\u2019s Pent-Up Demand +\nStimulus Payments Boosting Spending<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/image-2-of-4-1024x395.png\" alt=\"\" class=\"wp-image-8709\"\/><figcaption> <strong><em>Source: Federal Reserve Bank of St. Louis<sup>5<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n<p>Other spending categories are seeing signs of life again as\nwell. Pending home sales in April were brutal, with figures falling 34% from a\nyear earlier. But according to the National Association of Realtors, a\nseasonally adjusted measure of home-buying demand was up +16.5% by mid-May, and\nmortgage applications have been climbing every week since May. With the U.S.\n30-year fixed mortgage rate averaging 3.15%, it\u2019s as good a time as any to\nfinance.<sup>6<\/sup> Auto sales also rebounded strongly in May, coming off\nrecord-setting declines in March and April:<\/p>\n\n\n\n<p><strong>Auto Sales Saw a\nStrong Rebound in May<\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/image-3-of-4-1024x395.png\" alt=\"\" class=\"wp-image-8710\"\/><figcaption> <strong><em>Source: Federal Reserve Bank of St. Louis<sup>7<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n<p>Finally, I think it\u2019s important to acknowledge that going\ninto this crisis, the U.S. consumer was in <em>far\nbetter shape<\/em> as compared to household finances before and during the 2008\nfinancial crisis. Starting in the early 1990\u2019s, households in America have been\nseeing rising debt payments as a percent of disposable personal income. In\nother words, an increasing share of Americans\u2019 paychecks were going towards\npaying off debt. In the aftermath of the financial crisis, however, debt\npayments as a percent of income have plummeted, putting households in a better\nposition to recover more quickly this time around.<\/p>\n\n\n\n<p><strong>Household Finances\nHave Improved Over the Last 10 Years<\/strong><strong><\/strong><\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zacksim.com\/blog\/wp-content\/uploads\/2022\/02\/image-4-of-4-1024x395.png\" alt=\"\" class=\"wp-image-8711\"\/><figcaption> <strong><em>Source: Federal Reserve Bank of St. Louis<sup>8<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n<p><strong>Bottom Line for Investors<\/strong><\/p>\n\n\n\n<p>Does all this mean that the U.S.\nconsumer is poised to rescue the economy and bring back strong growth? Not\nnecessarily. As mentioned before, quite a bit hinges on how quickly people can\nreturn to work and also on how much longer fiscal stimulus will last \u2013 the extra\nunemployment benefit is currently set to expire on July 31, and Congress and\nthe White House are mulling another stimulus. Time will tell, but I wouldn\u2019t\nunderestimate the U.S. consumer.<\/p>\n\n\n\n<p>In addition to consumer spending, there are other data points and economic fundamentals that you should keep an eye on. To help you focus on the hard data, I am offering all readers our <strong><a href=\"https:\/\/go.steadyinvestor.com\/arrow-stock-market-outlook?source=website&amp;medium=blog&amp;term=motm_blog_2020_6_29&amp;content=stock_market_outlook_report\">Just-Released July 2020 Stock Market Outlook Report.\u00a0<\/a><\/strong><\/p>\n\n\n\n<p>This Special\nReport is packed with newly revised predictions that can help you base your\nnext investment move on hard data. For example, you&#8217;ll discover Zacks\u2019 view on:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><em>The economic\neffects of the COVID-19 pandemic <\/em><\/li><li><em>U.S. returns\nexpectations for 2020<\/em><\/li><li><em>Background on the\nU.S. fiscal stimulus program<\/em><\/li><li><em>Why you should be\ncareful in determining what S&amp;P 500 data to use<\/em><\/li><li><em>Zacks Rank\nS&amp;P 500 Sector Picks <\/em><\/li><li><em>Status of global\nenergy markets<\/em><\/li><li><em>What produces\n2020 optimism?&nbsp; <\/em><\/li><li><em>And much more<\/em><\/li><\/ul>\n\n\n\n<p>If you have $500,000 or more to invest and want to learn more about these forecasts, click on the link below to get your free report today!<sup>3<\/sup><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As the nation&#8217;s economy reopens, consumer spending rebound is stronger than anticipated<\/p>\n","protected":false},"author":3,"featured_media":7430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[63,71,1],"tags":[],"class_list":["post-8707","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-mitch-on-the-markets","category-private-client-group","category-uncategorized"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8707","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8707"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8707\/revisions"}],"predecessor-version":[{"id":10589,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8707\/revisions\/10589"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8707"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8707"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8707"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}