Making the Decision
Before making such a sector bet, having a well-thought-out thesis is critical. Does one foresee the green shoots sprouting into a full-blown consumer-led recovery? An increase in the consumer-spending portion of first-quarter GDP, a possible bottoming out in jobless claims, and some better industrial production data may support such a thesis. On the other hand, perhaps slowing April retail sales, a continued contraction in consumer credit, an increase in the savings rate, and still-depressed housing and auto sectors point to, at best, a modest recovery. Consumer spending may remain depressed for some time.
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