Its again that part of the year, when investors’ focus automatically shifts toward the Retail-Wholesale sector. Wage acceleration, steady job growth, improving consumer confidence and sound economic fundamentals are painting an euphoric picture for the holiday season. Consequently, investors will definitely be on hunt to add some solid retail stocks that are likely to ride high on these bullish sentiments.
Few Fact Checks
The U.S. economy improved at its rapidest pace in nearly four years, expanding 4.2% during the April-June quarter, per the third estimate released by the Commerce Department. This quarterly GDP number displayed a remarkable improvement over 2.2% increase scaled in the first quarter. Economists believe that the economy is all set to achieve Trump administration’s GDP growth rate target of roughly 3%. Nevertheless, the impact of the trade war on the U.S. economy cannot be dismissed.
Another factor that makes the case strong for a delightful festive season is the buoyant consumer sentiment. U.S. Consumer Confidence — a key determinant of the economy’s health — reached its highest level since September 2000. Per the Conference Board data, the Consumer Confidence Index surged to 138.4 in September from August’s reading of 134.7 driven by strengthening labor market, tax reform and rising income. The U.S. economy added 201,000 jobs in the last month.
Quite apparently, consumer spending — one of the pivotal factors driving the economy — is also likely to remain strong, unless arrested by a sharp spike in gasoline prices that might lower their propensity to consume. As a result, a splendid festive season is in the offing. This is quite evident from the Deloitte’s recent holiday sales projection. Per the report, sales are expected to increase 5-5.6% between November 2018 and January 2019. Holiday sales, excluding motor vehicles and gasoline, are likely to be more than $1.10 trillion.
Retailers Are All Charged Up