Economists are saying that when it comes to saving the economy, consumer spending just won't do the trick. According to CNBC, economists say this one-time driving force of GDP growth is expected to remain stagnant as households struggle to cut their debt and build savings.
Consumer spending is an important indicator of economic growth as it makes up 70% of U.S. GDP. In the current economic climate, economists argue that until personal debt is cleared away, spending is unlikely to increase. And it will be even later when strong and steady consumer spending is a reliable factor for accelerating economic growth. Until that point decreased consumer spending will continue to serve as a hindrance to development.
The U.S. Department of Labor reports consumer spending was down 2% last year following a 2.8% drop in 2009. The usual suspects are at play: unemployment, market volatility, uncertain future, and higher commodity prices. To the curious anticipation of many, the Commerce Department will report consumer-spending numbers for August on Friday.
Heavy debate has risen on the government's role in addressing the debt issue and stimulating spending. Those in favor of government action suggest the government should provide debt relief to repair consumers' balance sheets. Others argue that the government should allow the debt/savings balance to run its course because consumers are more likely to save than spend government funding in anticipation of higher taxes.
Either way, all are aware of the threats that impaired spending poses to the economy. The question remains, what actions will propel consumer spending growth and how long it will take to see results?
Economists may be gloomy about the outlook for consumer spending, but we've found some evidence that company executives differ in their opinions.
Below, we list seven consumer stocks that have seen significant insider buying over the last six months.
Insiders don't seem to be too concerned about the outlooks of their employers -- does this signal a buy opportunity?
List sorted alphabetically. (Click here to access free, interactive tools to analyze these ideas.)
1. American Eagle Outfitters
2. Charming Shoppes
4. Hot Topic
5. Collective Brands
6. Pacific Sunwear of California
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Eben Esterhuizen and Rebecca Lipman do not own any of the shares mentioned above. Data sourced from Yahoo! Finance.
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