U.S. consumer spending increased 1% in August, mirroring the gradual regaining of confidence and economic recovery from the worst of the coronavirus pandemic. The August gain marked the third straight monthly increase in consumer spending.
The rise in consumer spending comes despite a decline in personal income. However, with a vaccine for the deadly coronavirus yet to be developed, people are still reeling under the fear of getting infected and are stockpiling on necessities, which is pushing up their spending.
Americans Spend More Despite Decline in Personal Income
A report from the Commerce Department on Oct 1 showed that consumer spending rose 1% in August after increasing 1.5% in July. Economists had forecast consumer spending, which accounts for more than two-thirds of U.S. economic activity, to advance 0.8% in August.
The rise comes despite a 2.7% drop in personal income in August, reflecting a decline in unemployment insurance benefits. A $600 unemployment subsidy ended in July and was replaced by a $300 supplement. Income increased 0.5% in July.
However, the economy is on track for record growth in the third quarter after a historic slump in the April-June period. Third-quarter GDP growth estimates are topping a 32% annualized rate. The economy contracted at a 31.4% pace in the second quarter, marking the deepest decline since the government started keeping records in 1947.
Consumers Showing Faith in Economy
The United States witnessed the worst decline in the second quarter since 1947. But people have not lost confidence in the economy’s strength and are willing to spend. Consumer confidence fell to a record low in the early months of the pandemic as travel froze up and shutdown orders forced many restaurants, bars, entertainment venues and other retailers to close. But life somewhat has started going back to normal, and consumer spending is improving.
We cannot, however, ignore that even though people are willing to spend on entertainment, travel, or holiday, there aren’t too many options given that the fear of the virus is preventing states to fully get back to normal functioning. So, consumer spending is likely to be more on essential commodities in the days to come.
Our Choices Grocery Outlet Holding Corp. ( GO Quick Quote GO - Free Report) is a high-growth, extreme-value retailer of quality, name-brand consumables and fresh products that are sold through a network of independently owned and operated stores.
The company’s expected earnings growth rate for the current year is 54.4%. The Zacks Consensus Estimate for current-year earnings has improved 22% over the past 60 days. Grocery Outlet Holding has a Zacks Rank #1 (Strong Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here. Lifetime Brands, Inc. ( LCUT Quick Quote LCUT - Free Report) is a leading designer, marketer and distributor of kitchenware, cutlery & cutting boards, bakeware & cookware, pantryware & spices, tabletop and bath accessories.
The company’s expected earnings growth rate for the current year is 53.3%. The Zacks Consensus Estimate for current-year earnings has improved 97.1% over the past 60 days. Lifetime Brands has a Zacks Rank #2 (Buy).
Ollies Bargain Outlet Holdings, Inc. ( OLLI Quick Quote OLLI - Free Report) is a value retailer of brand name merchandise at drastically reduced prices. The company offers products principally under Ollie’s, Ollie’s Bargain Outlet, Good Stuff Cheap, Ollie’s Army, Real Brands Real Cheap!, Real Brands! Real Bargains!, Sarasota Breeze, Steelton Tools, American Way and Commonwealth Classics.
The company’s expected earnings growth rate for the current year is 54.6%. The Zacks Consensus Estimate for current-year earnings has improved 7.8% over the past 60 days. Ollies Bargain Outle thas a Zacks Rank #2.
Prestige Consumer Healthcare Inc. ( PBH Quick Quote PBH - Free Report) and its subsidiaries develop, manufacture, market, sell and distribute over-the-counter healthcare and household cleaning products in the United States, Canada, Australia and certain other international markets.
The company’s expected earnings growth rate for the current year is 6.4%. The Zacks Consensus Estimate for current-year earnings has improved 5.4% over the past 60 days. Prestige Consumer Healthcare has a Zacks Rank #2.
Spectrum Brands Holdings Inc. ( SPB Quick Quote SPB - Free Report) offers a portfolio of leading brands in several product categories like residential locksets, plumbing, electric shaving and grooming products, personal care products, small household appliances, specialty pet supplies, and lawn, garden and home pest control products and repellents.
The company’s expected earnings growth rate for the current year is 25.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 60 days. Spectrum Brands has a Zacks Rank #2.
5 Stocks Set to Double
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