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December 20, 2012 at 07:00 PM
How important are consumers to the economy? Very important, as any economist worth their salt will admit. And despite big fiscal problems in Washington D.C., U.S. consumers are not only feeling better, but showing it.
Consumer confidence in November rose to 73.7—its highest reading in four years, according to the Conference Board.
An uptick in home prices has helped lift consumers’ mood. Property values in the S&P/Case-Shiller 20-City Index advanced 3% from September 2011. Mortgage rates are still at multi-decade lows and home affordability has improved.
Stocks within the S&P 500 linked to consumer spending have been hot performers. The Consumer Discretionary SPDR (XLY) has climbed 21.02% while the Consumer Staples SPDR (XLP) is ahead by 11% year-to-date.
XLY owns stocks linked to consumer durables, apparel, hotels, restaurants, leisure, media and retailing. Top stock holdings include Amazon.com, Home Depot and Starbucks.
