All eyes are on the consumer (that is to say, all of us) as investors look for clues to the shape of the economic recovery. While the stock market’s recovery currently looks like a V-shape, the economic and corporate earnings recoveries are just starting to come off their lows and may not look like a V. We think the economic recovery will be longer and look more like a U, which could cause more stock market volatility as investors adjust their expectations. But enough with the letters and shapes—the consumers who make up roughly 70% of gross domestic product in America will decide how the recovery looks.
Consumer spending will be determined by two main factors: how much the consumer has to spend, and how much mobility the consumer has to spend the money they have. There has been a rise in online spending, but consumers will need the ability to get out of their homes to spend money on big-ticket items like vacations, restaurants and bars, and sporting and entertainment events.
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Commentaries are published by Cetera Investment Management LLC, an SEC registered adviser owned by Cetera Financial Group. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.
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