Good news, all your Black Friday gawkers! The mall is going to be an absolute mess — chock full of deal-frenzied shoppers, eager to open their wallets and throw around more money than Sheldon Adelson at a GOP fundraiser.
What? Too soon?
Anyway here’s the skinny on the consumer front — and why it bodes well for investors and businesses in 2013:
- The consumer sentiment index from Thomson Reuters and the University of Michigan hit a five-year high in October.
- Discover Financial (NYSE:DFS) maintains a “U.S. Spending Monitor” that just saw its largest one-month increase in history, and an all-time high in October.
- In the third quarter, consumer spending increased at a 2.1% annual rate, bolstering GDP growth, according to a Bloomberg survey of economists.
- The retail sector, as measured by the SPDR S&P Retail ETF (NYSE:XRT), has surged nearly 20% in the past 12 months — about double the broader market.
- FedEx (NYSE:FDX) sees holiday shipments climbing 13%, according to a recent CNBC report.
- And though it is clearly a soulless money grab and unfair to employees … Walmart (NYSE:WMT) is pushing up Black Friday all the way to 8 p.m. Thanksgiving night to wring the most out of this holiday shopping season.
In short: Bring on Santa!
There still is some big-time trouble out there, to be sure — from an ugly earnings slowdown and political gridlock over the fiscal cliff in America to geopolitical unrest in the Middle East to Europe’s disastrous debt situation. This has admittedly weighed a bit on business sentiment.
But as GDP numbers showed last quarter, a stronger attitude from consumers helped pull the economy forward … at a sluggish pace, but at least forward.
And in the longer-term, a consumer-led recovery is the most practical kind of recovery. What, you think that businesses hunkered down in “efficiency mode” are going to willingly take a stab at growth without a clear sign of recovery? Not happening. Consumers have to blink first. A sustained spending push that fills up their coffers will be the only thing to change CEO attitudes.
Consumer spending is volatile, of course, and a big shock in the form of higher gas prices or a housing double-dip or a stock market crash could change things.
However, all signs are clearly pointing up. And the longer they do so, the more sustainable a rally in 2013 will be.
- Consumers confidence is up … but CEO confidence is admittedly down. (The Slant)
- Required reading for every consumer spending story: Don’t believe the myth that 70% of GDP is consumer spending, because it’s not. (Bloomberg Businessweek)
- VIDEO: 5 retail stocks for this holiday season. (The Motley Fool)
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.