You Probably Missed Yesterday’s “Mac Daddy” Retail News
Here’s a pop quiz for you…
How can you tell if the U.S. economy is strengthening, or if we’re heading into a more challenging period?
It’s not the country’s GDP… It’s not a measure of inflation… And it’s not some manufacturing statistic.
Just yesterday, investors got an important piece of information that tells us exactly how things are shaping up for the second half of this year.
If you missed this piece of information, you could be tricked into missing out on some big opportunities!
But today, I’ll tell you exactly how to profit from key investment plays tied to this special report.
Retail Sales — The Mac Daddy of All Economic Reports
The most important piece of information you should be looking at this week is the retail sales report that came out yesterday morning.
You’ve probably heard that about 70% of our economy is tied to consumer spending. So a report that tells us how (and where) consumers are spending their money can be pure gold when deciding where to invest.
This month, it is particularly important to follow this retail sales report because of some of the concerns investors have.
With the trade war between the U.S. and China raging, and a few questionable economic reports weighing on investors’ minds, some expected a weak retail sales report.
The general reasoning was that with concerns on the horizon, shoppers may decide to spend a bit less and instead set some money aside for a rainy day.
The general consensus was that retail spending would pick up just one tenth of one percent over last month for a marginal gain.
But that’s not at all what happened!
Instead, the U.S. consumer grew spending by roughly four times the expected amount, posting a 0.4% increase.1
That may sound like a small number, but when you consider the $520 billion monthly spending budget for Americans, a 0.4% increase actually translates to a huge dollar figure.2
What’s more, the sales data actually got better when looking more closely at the details.
For instance, if you ignore a pullback in gasoline sales (which people buy pretty much regardless of the price), the increase in other sales was even higher — a full 0.7%.
And if you compare consumer spending to June of last year (instead of to the previous month), consumer spending has grown by 13.4%. That’s a tremendous level of annual growth that shows our economy is certainly growing at a healthy pace!
With all of this good news, you should naturally be asking how you can profit. And that’s exactly what I wanted to share with you today.
Here’s How to Profit from Strong Retail Sales
Although consumers are spending money, that doesn’t mean all retail stocks will make you money.
There are some important shifts and pockets of opportunity you need to be aware of to lock in the biggest return for your investments.
To start with, online sales were particularly strong, while department store sales were very weak.
This should come as a surprise to no one, because we’re seeing a major shift towards shopping online for everything from daily staples like toothpaste and deodorant to large purchases like furniture and even vehicles!
(My family bought a new outdoor patio table and chairs online this week to enjoy our backyard this summer.)
Now, when you think of strong online sales, it’s natural to consider Amazon as your first investment. But keep in mind, that stock is expensive compared to how much profit the company earns, and there are also some regulatory risks you need to watch out for.
But investing in individual retailers who have successfully moved a major part of their sales to their website is a great way to tap into this trend.
Other areas of strength included restaurants, grocery chains, home furnishings, apparel, and pharmacies.
All of these areas tie into specific opportunities we’ve been consistently covering here at The Daily Edge.
A strong job market and surging stocks have led to a wealth effect that drives more consumer spending. And with interest rates now headed lower, there is more demand for homes and the furnishings and appliances to fill them.
Bottom line, this week’s retail sales report paints a clear picture of an economy that continues to grow at a steady pace. It’s a perfect environment for us to grow our wealth by investing in companies that are benefiting from this spending.
And here at The Daily Edge, we will continue to follow the developments and show you the best way to profit.
Here’s to growing and protecting your wealth!