The confidence level among Americans reached an all-time high in April, suggesting strong economic growth in the coming period. The Consumer Confidence Index rose to 128, surpassing the April estimate of 125.6. As per the Conference board, the confidence level has touched an 18-year high. This is better than March, when the index stood at 127. Americans were optimistic about their finances and felt that cracking jobs has become comparatively easier.
Why Confidence is On Rise
The larger indication is that the U.S. economy is speeding up and gradually recovering from the slow start it had in the beginning of 2018. Unemployment hit a record low of 3.9% in April, which is the lowest since December 2000. The U.S. economy added 164,000 jobs in April,while wage growth remained sluggish. This was mainly because of unavailability of skilled employees and changing job preferences of the youth (read: April Jobs Data Mixed Bag: 3 Sector ETFs & Stocks to Gain).
As per a survey by JPMorgan, conducted on 1685 executives, 64% of entrepreneurs were willing to increase full-time employees while 76% talked about increasing compensation. So hiring in the second quarter is expected to rise, along with consumer spending. The corporate sector is also looking to increase profits with lower tax and a developed start-up ecosystem generating new business models along with revenues.
The real estate prices have increased due to shortage of available homes for sale. Consumer spending,however, has been tight with automobiles, appliances and houses saw decline in sales volume (read: Housing ETFs to Buy in 2018).
With rising consumer confidence it is expected that consumer discretionary ETFs will perform well. Investors who intend to benefit from this sector should focus on the ETFs mentioned below.
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