Consumer spending is critical to headline growth in the US
In the US (SPY) (IVV), household spending represents about 68% of the gross domestic product (or GDP). In comparison, household spending represents 34% of the GDP in China (FXI), 56% in Germany (EWG), 60% in India (EPI), and 52% in Russia (RSX). Therefore, consumer spending is critical to headline growth in the US.
The May 4 Gallup consumer spending report led the SPDR S&P 500 ETF (SPY) up 0.28% and the Consumer Discretionary Select Sector SPDR ETF (XLY) up 0.21%. Consumer firms such as Wynn Resorts (WYNN), Gamestop (GME), and Carmaxx (KMX) gained 3.97%, 2.43%, and 2.18%, respectively, by the May 4 market close. So far this year, the SPY has gained 2.81%, the XLY has returned 6.04%, while WYNN, GME, and KMX, have recorded a 21.23% drop, a 18.70% gain, and a 7.13% gain, respectively.
Gallup spending measure strengthened to $91 in April
Gallup tracks daily discretionary expenditures through more than 15,000 interviews with American adults. It surveys respondents on their discretionary spending expenditure the previous day. Gallup’s self-reported consumer spending poll for the US in April was released on Monday, May 4. According to the report, average daily consumer spending for Americans increased slightly to $91 in April. Spending is up $5 over the March 2015 average of $86, and also higher than the $88 daily average recorded last April.
April saw the largest monthly increase since November 2014
Historically, spring has warmed up consumer spending. April saw the largest monthly increase in consumer spending since November 2014.
May 4 also saw a number of manufacturing reports come out in the Eurozone. In the next article, let’s take a quick look at these readings to gauge the impact of the European Central Bank’s monetary stimulus measures.