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As we embark on 2024, there's a noticeable uptick in consumer confidence regarding the economy and inflation, despite looming concerns over a potential economic slowdown. This positive sentiment is reflected in the latest findings from the University of Michigan’s Survey of Consumers.
Improving Economic Sentiment
The survey for January revealed a significant rise in consumer sentiment, reaching a high of 78.8, the most robust level since July 2021. This represents a substantial 21.4% increase from the previous year, marking the most considerable improvement over two months since 1991. Joanne Hsu, the survey’s director, attributes this surge to growing confidence in inflation management and stronger income expectations, as quoted on CNBC.
Falling Inflation and Improving Economic Outlook
Consumers are showing greater confidence that inflation is on a downward trajectory. The expected inflation rate for the coming year has decreased to 2.9%, the lowest since December 2020, as quoted on CNBC. This optimism came on the heels of the Fed’s actions, which have raised short-term interest rates to their highest in over two decades. Consequently, inflation has started to decrease, although it remains above the central bank's 2% target.
Consumer Spending Strong; Delinquencies Down from 2019
American Express CEO Stephen Squeri highlighted robust consumer spending during the holiday season and overall healthy U.S. spending trends, as quoted on CNBC. He noted that delinquency rates are lower than in 2019, underscoring strong consumer financial health. Despite the persistent inflation, Squeri remains optimistic about a "soft landing" for the economy, expecting a slowdown in spending that will help manage inflation without triggering a recession.
Any Caveat?
JPMorgan Chase CEO Jamie Dimon and Goldman Sachs CEO David Solomon have expressed cautious views on the U.S. economy, as quoted on CNBC. They are skeptical about the number of Federal Reserve rate cuts anticipated by the market in 2024. The market is keenly observing the Federal Reserve's interest rate policies, anticipating up to six quarter-percentage-point reductions this year. The timing of these cuts, however, remains uncertain.
ETFs in Focus
Against this backdrop, below we highlight a few consumer-discretionary ETFs that can tapped now.
Roundhill Sports Betting & iGaming ETF (BETZ - Free Report) – Up 4.4% Past Week
iShares U.S. Consumer Focused ETF (IEDI - Free Report) – Up 0.3% Past Week
Invesco Next Gen Media and Gaming ETF (GGME - Free Report) – Up 0.3% Past Week
AdvisorShares Vice ETF (VICE - Free Report) – Up 0.2% Past Week
Invesco Leisure and Entertainment ETF (PEJ - Free Report) – Up 0.02% Past Week
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)
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3 Factors to Bet on U.S. Consumer ETFs
As we embark on 2024, there's a noticeable uptick in consumer confidence regarding the economy and inflation, despite looming concerns over a potential economic slowdown. This positive sentiment is reflected in the latest findings from the University of Michigan’s Survey of Consumers.
Improving Economic Sentiment
The survey for January revealed a significant rise in consumer sentiment, reaching a high of 78.8, the most robust level since July 2021. This represents a substantial 21.4% increase from the previous year, marking the most considerable improvement over two months since 1991. Joanne Hsu, the survey’s director, attributes this surge to growing confidence in inflation management and stronger income expectations, as quoted on CNBC.
Falling Inflation and Improving Economic Outlook
Consumers are showing greater confidence that inflation is on a downward trajectory. The expected inflation rate for the coming year has decreased to 2.9%, the lowest since December 2020, as quoted on CNBC. This optimism came on the heels of the Fed’s actions, which have raised short-term interest rates to their highest in over two decades. Consequently, inflation has started to decrease, although it remains above the central bank's 2% target.
Consumer Spending Strong; Delinquencies Down from 2019
American Express CEO Stephen Squeri highlighted robust consumer spending during the holiday season and overall healthy U.S. spending trends, as quoted on CNBC. He noted that delinquency rates are lower than in 2019, underscoring strong consumer financial health. Despite the persistent inflation, Squeri remains optimistic about a "soft landing" for the economy, expecting a slowdown in spending that will help manage inflation without triggering a recession.
Any Caveat?
JPMorgan Chase CEO Jamie Dimon and Goldman Sachs CEO David Solomon have expressed cautious views on the U.S. economy, as quoted on CNBC. They are skeptical about the number of Federal Reserve rate cuts anticipated by the market in 2024. The market is keenly observing the Federal Reserve's interest rate policies, anticipating up to six quarter-percentage-point reductions this year. The timing of these cuts, however, remains uncertain.
ETFs in Focus
Against this backdrop, below we highlight a few consumer-discretionary ETFs that can tapped now.
Roundhill Sports Betting & iGaming ETF (BETZ - Free Report) – Up 4.4% Past Week
iShares U.S. Consumer Focused ETF (IEDI - Free Report) – Up 0.3% Past Week
Invesco Next Gen Media and Gaming ETF (GGME - Free Report) – Up 0.3% Past Week
AdvisorShares Vice ETF (VICE - Free Report) – Up 0.2% Past Week
Invesco Leisure and Entertainment ETF (PEJ - Free Report) – Up 0.02% Past Week
(Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.)