Navegó a una página que no está disponible en español en este momento. Seleccione el enlace si desea ver otro contenido en español.Página principal
Analysis and outlook for the global economy
What it may mean for investors
'Tis the Season
With the presidential election behind us, U.S. consumers appear in good spirits entering the holiday shopping season. Although foot traffic declined slightly from last year's level, online sales on Thanksgiving Day and Black Friday increased by approximately 18 percent to around $5.27 billion, and retail revenue from mobile-device transactions rose to $1.2 billion on Black Friday, a 33 percent hike over last year's level. Further, The Conference Board's Consumer Confidence Index jumped 6.3 points to 107.1 in November, reverting to pre-crisis levels. University of Michigan consumer sentiment also climbed 4.2 points in December over last month in the initial release. Although post-election confidence levels typically improve, the latest report indicated optimism about current and future economic conditions.
Chart 1. Current Conditions and Consumer Expectations Measures Jumped after the U.S. Election
Source: Bloomberg, Wells Fargo Investment Institute, 12/14/16. Circled data highlights the recent jump in sentiment.
Consumer Enthusiasm with a Sprinkle of Holiday Cheer
The National Retail Federation (NRF) estimated that 154 million consumers shopped over Thanksgiving weekend this year, three million more shoppers than last year. Average spending per person over the period totaled $289.19, about a $10 dip from last year.2 Although spending per person may fall slightly below last year's level, overall sales volumes are expected to increase this year. We expect total holiday sales to rise by 3.8 percent this year over 2015, compared to a 2.9 percent increase last year over 2014.3 This expectation is slightly more bullish than the NRF's forecast of 3.6 percent. More broadly, retail sales increased 0.1 percent in November over the previous month, adding to year-end momentum.
The U.S. economic backdrop appears to support a robust holiday sales season this year, giving consumers plenty of cheer. The domestic unemployment rate ticked down to 4.6 percent last month, the lowest level of the recovery. Nationally, home prices are rising—the Case-Shiller U.S. National Home Price Index has risen 5.5 percent over the past year—and the U.S. equity market continues to break new highs, enhancing the wealth effect for consumers and investors alike. In a recent Gallup poll conducted during the last week of November, Americans expressed more optimism about the U.S. economy than they have during the nine years that Gallup has been tracking the U.S. Economic Confidence Index.4 This result likely stemmed from a combination of factors, including an improving economy and the end of a drawn-out, contentious presidential election.
Consumers are once again open to using credit to purchase goods. Last quarter, auto loans grew by 2.9 percent, credit card balances rose by 2.5 percent, and student loans increased by 1.6 percent. Yet, along with the rise in credit usage, we have seen a 3.3 percent increase in total household 90+ day delinquency rates—delinquency rates at 90+ days are known as seriously delinquent. While this is not a positive development, it should not cause immediate concern for market observers. Credit can help promote economic activity when used in moderation— though too much credit can pose a threat to the economy. In our view, U.S. consumers are currently at a healthy level of credit usage, and we anticipate that consumer spending will continue to be supported by the ongoing growth in wages and jobs.
We expect that the U.S. economy will continue along its slow-and-steady growth trajectory for at least another year. Much of the growth will be driven by U.S. consumer spending, which comprises about 70 percent of the U.S. economy, on average. We are forecasting real consumer spending to expand by 2.3 percent this quarter on an annualized basis, mirroring last year's growth (with inflation factored in). Inflation has increased slightly over the past year, leading to a flattening of disposable income. Yet, solid job growth and wage increases have helped to offset its effects.
Later this week, the final version of December's University of Michigan consumer sentiment report will be released. Sentiment has been floating around its 2015 12-year high since the announcement of President-elect Trump's victory. We expect that this week's reading will remain near these recent highs as large holiday discounts create optimal buying conditions for consumers. We are keeping a close eye on future sentiment as concern over rising interest rates could add some uncertainty around buying homes and vehicles in the future.
Even though domestic economic growth picked up during the third quarter, we are still forecasting the U.S. economy to grow by 1.9 percent this year. Looking into next year, we are forecasting a 2.1-percent economic growth rate. U.S. employment conditions should continue to improve. As we proceed through the holiday season and into the New Year, we believe that any periods of volatility should be viewed as an opportunity to bring asset classes in line with target allocations.
1 Bloomberg, 11/26/16. Data is from Adobe Systems Incorporated.
2 National Retail Federation 11/27/16
3 Wells Fargo Securities, 11/21/16
4 Gallup.com, 11/29/16
All investing involves risks including the possible loss of principal. Equity securities are subject to market risk which means their value may fluctuate in response to general economic and market conditions and the perception of individual issuers. Investments in equity securities are generally more volatile than other types of securities.
An index is unmanaged and not available for direct investment.
The Conference Board Consumer Confidence Index® (CCI) is a barometer of the health of the U.S. economy from the perspective of the consumer. The index is based on consumers' perceptions of current business and employment conditions, as well as their expectations for six months hence regarding business conditions, employment, and income.
The Michigan Consumer Sentiment Index provides a monthly rating of consumer sentiment or optimism. The rating is based on consumers' attitudes toward their financial health, the state of the economy, and general consumer spending. The core questions cover three broad areas of consumer sentiment: personal finances, business conditions, and buying conditions.
The Index of Consumer Expectations is a subset of the University of Michigan Consumer Sentiment survey. It measures the attitudes towards business conditions in the economy as whole over the long-term horizon.
The Index of Current Conditions is a subset of the University of Michigan Consumer Sentiment survey. It measures the attitudes towards business conditions in the economy as whole in the near term.
S&P/Case-Shiller U.S. National Home Price Index tracks the value of single-family housing within the United States. The index is a composite of single-family home price indices for the nine U.S. Census divisions.
Global Investment Strategy (GIS) is a division of Wells Fargo Investment Institute, Inc. (WFII) WFII is a registered investment adviser and wholly-owned subsidiary of Wells Fargo & Company and provides investment advice to Wells Fargo Bank, N.A., Wells Fargo Advisors and other Wells Fargo affiliates. Wells Fargo Bank, N.A. is a bank affiliate of Wells Fargo & Company.
The information in this report was prepared by Global Investment Strategy. Opinions represent GIS' opinion as of the date of this report and are for general information purposes only and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally. GIS does not undertake to advise you of any change in its opinions or the information contained in this report. Wells Fargo & Company affiliates may issue reports or have opinions that are inconsistent with, and reach different conclusions from, this report.
This report is not intended to be a client-specific suitability analysis or recommendation, an offer to participate in any investment, or a recommendation to buy, hold or sell securities. Do not use this report as the sole basis for investment decisions. Do not select an asset class or investment product based on performance alone. Consider all relevant information, including your existing portfolio, investment objectives, risk tolerance, liquidity needs and investment time horizon.
There is no assurance that any of the target prices or other forward-looking statements mentioned will be attained. Any market prices are only indications of market values and are subject to change.
Wells Fargo Advisors is registered with the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority, but is not licensed or registered with any financial services regulatory authority outside of the U.S. Non-U.S. residents who maintain U.S.-based financial services account(s) with Wells Fargo Advisors may not be afforded certain protections conferred by legislation and regulations in their country of residence in respect of any investments, investment transactions or communications made with Wells Fargo Advisors.
Wells Fargo Advisors is a trade name used by Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, separate registered broker-dealers and non-bank affiliates of Wells Fargo & Company. CAR# 1216-03120
© 2016 Wells Fargo Investment Institute. All rights reserved.