U.S. consumer spending increased slightly in October, as the economy is crawling back from coronavirus-led devastations. Although the rise in consumer spending came with a decline in personal income, the good sign is that people are showing confidence in the economy.
At the same time, the recent spike in coronavirus cases has again raised fears in the minds of people despite some positive news on the vaccine front. This may once again compel people to stockpile on necessities.
Consumer Spending Increases in October
U.S. consumer spending rose a moderate 0.5% in October, the Commerce Department said on Nov 25. Consumer spending accounts for more than two-thirds of the U.S. economic activity and October’s gain was the slowest since April.
Consumer spending had jumped 1.2% in September. The primary reason behind consumer spending slowing was the decline in personal income, which dropped 07% in October, reversing a gain of 0.7% in September.
This shows that people are wary of the coronavirus situation given the sudden rise in new infections over the past month. However, the good sign is that it is still rising as peoples’ faith in the economy is intact.
Coronavirus Fears Building Again
The United States has reported more than 13.4 million coronavirus cases as of Nov 30 and experts have warned that it may further rise as winter sets in. The U.S. economy took a battering in March and April following the outbreak which compelled the government to opt for shutdowns. However, consumer spending started improving from May, indicating that life is somewhat going back to normal with states lifting restrictions.
Moreover, the country’s economy rebounded in the third quarter with the GDP jumping a historic 33.1%. This once again shows that people have not lost confidence in the economy’s strength, which is making them spend.
That said, coronavirus fears have failed to subside despite some positive news on the vaccine front. Hence, despite consumer spending having increased over the past few months, it is likely that people will focus more on buying essential commodities in the days to come. This is mainly because even if they want to spend on things like entertainment, they aren’t left with many options now.
Although GDP rebounded in the third quarter and consumer spending increased for the sixth straight month, spending will remain restricted to essential consumer goods. So this is the ideal time to invest in these essential goods stocks.
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 21%. The Zacks Consensus Estimate for current-year earnings has improved 17.8% over the past 60 days. Spectrum Brands has a Zacks Rank #2 (Buy). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Reynolds Consumer Products Inc. ( REYN Quick Quote REYN - Free Report) is a consumer branded and private label products company. It produces and sells branded and store-brand products, which include cooking products, waste & storage products, and tableware.
The company’s expected earnings growth rate for the current year is 36.6%. The Zacks Consensus Estimate for current-year earnings has improved 2.6% over the past 60 days. Reynolds Consumer Products holds a Zacks Rank #2.
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 87.3%. The Zacks Consensus Estimate for current-year earnings has improved 25.4% over the past 60 days. Grocery Outlet has a Zacks Rank #1.
WD40 Company ( WDFC Quick Quote WDFC - Free Report) offers multi-purpose maintenance products, including aerosol sprays, non-aerosol trigger sprays, and liquid forms under the WD-40 Multi-Use brand for various consumer uses and specialty maintenance products.
The company’s expected earnings growth rate for the current year is 10.5%. The Zacks Consensus Estimate for current-year earnings has improved 3% over the past 60 days. WD40 Company carries a Zacks Rank #2.
Tupperware Brands Corporation is the leading global marketer of innovative, premium products across multiple brands utilizing a social selling method through independent sales.
The company’s expected earnings growth rate for the current year is 85.6%. The Zacks Consensus Estimate for current-year earnings has improved 60.4% over the past 60 days. Tupperware Brands Corporations ports a Zacks Rank #1.
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