The American consumer is very strong and ready to splurge this holiday season. Retail sales rose in October for the third consecutive month, and the most in seven months. Large savings amassed during the pandemic and rising wages are resulting in robust spending, even though inflation is rising at the fastest pace in 30 years.

Retail earnings have mostly been better than expected but many companies reported margin pressures resulting from supply chain disruptions, rising costs and labor shortages. Economists expect supply chain disruptions to ease in the coming months, but don’t expect a return to pre-pandemic levels until next year.

The National Retail Federation (NRF) expects holiday sales during November and December to rise between 8.5% and 10.5%. “There is considerable momentum heading into the holiday shopping season,” per NRF CEO.

The SPDR S&P Retail ETF (XRT Quick QuoteXRT - Free Report) is an equal-weighted ETF that provides broad exposure to retail industry. The Invesco S&P SmallCap Consumer Discretionary ETF (PSCD Quick QuotePSCD - Free Report) selects consumer discretionary stocks from the S&P SmallCap 600 index.

The Invesco DWA Consumer Cyclicals Momentum ETF (PEZ Quick QuotePEZ - Free Report) selects and weights stocks by price momentum. Macy’s (M Quick QuoteM - Free Report) , Signet Jewelers (SIG Quick QuoteSIG - Free Report) and Dillard’s (DDS Quick QuoteDDS - Free Report) are among the top holdings in these ETFs.

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