Consumer Mood Improves (XLY, XRT, VCR, VDC, IYK)

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retail sales1 181x300 Consumer Mood Improves (XLY, XRT, VCR, VDC, IYK)

Consumer sentiment rises in February for sixth straight month in a row.

Consumers are feeling better about the economy and their personal circumstances as sentiment rose to 75.3 from last month’s reading of 75.

Expectations were also improved while the mood regarding current conditions declined.

The overall indicator beat analysts’ expectations as ongoing high unemployment, high oil prices and the European debt crisis were largely ignored by the all important consumer sector which accounts for 70% of the U.S. economy.  While the gauge continues to improve, it is still well below normal readings during good economic times.

The report indicates that “inflation-adjusted personal consumption expenditures can be expected to grow by 2.3% in 2012.”

Director of the survey, Richard Curtin said, “Consumers have shrugged off concerns about rising gas prices, the European crisis, and election year politics, preferring to focus on the favorable impact of job growth. A potential threat is that consumers expect too much too soon. Improved job prospects may entice many more people to seek work, easily outstripping the number of new jobs created. While election year politics typically raise economic prospects, it may also increase the negative consequences if the promised gains fail to materialize. While growth prospects for consumer spending have improved, the new pace of gains may only edge up to a brisk walk, at best.”

At 75.3, the index is above January’s reading but below last February’s.

Read the full report

Important Consumer ETFs:

Consumer Discretionary Select Sector SPDR ETF (NYSEARCA:XLY) tracks the price and yield of the Consumer Discretionary Select Sector Index and the ETF was up 0.2% in morning trade and reaching overbought levels and so subject to a correction.

SPDR S&P Retail ETF (NYSEARCA:XRT) tracks the S&P Retail Select Industry Index and follows apparel, automotive, food and department store retail businesses. The ETF climbed 0.4% in morning trade and is in a consolidation pattern, up approximately 15% from December lows.

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