American Consumer Slowdown Impedes Retail ETFs

Spender’s remorse has set in and retail-related exchange traded funds (ETFs) are showing the aftermath of a less enthusiastic buyer.

The most recent figures show that the American economy has shrunk by an annualized rate 0.3% in the 3rd quarter. Consumer spending, the largest factor in the GDP, fell at an annualized rate of 3.1%, according to a report by the Economist.

On top of consumer confidence bottoming out, the unemployment rate has risen to 6.1% and there is no bright side to that percentage. It is projected that unemployment may even be pushed to 6.3% in the weeks ahead.

Banks are loath to lend to anyone, furthering the mindset of a credit crunch. Lost wealth is seen as a chance for consumers to curb spending habits and to start putting their money in their piggy banks.

A few retail-associated ETFs hit by a lack of consumers consuming include:

• SPDR S&P Retail (XRT): down 29.6% year-to-date

• Retal HOLDRs (RTH): down 16.3% year-to-date

Posted in Categories: Contributor, ETFs, External Research, Stocks.

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