The following video is part of our "Motley Fool Conversations" series, in which analyst Austin Smith and technology and media editor/analyst Andrew Tonner discuss topics around the investing world.
In today's edition, Austin and Andrew try to determine whether the middle class is roaring back. Some strong recent performance from the retail and auto sectors are encouraging and would indicate that Joe and Jane Americana are getting back on their feet. But don't be too hasty: Those big numbers are encouraging, but they need to be put into perspective. The impressive retail sales numbers are largely due to one of our warmest winters in the past 50 years. Compare that with last year's extremely cold and snowy winter, and it's easy to see why year-over-year comparisons produce extremely favorable figures.
As for autos, there's a pent-up demand for new cars that seems to be waiting for the floodgates to open, and the recent sales growth could be the first trickle. With the average age of the automobile the highest it's been in years, consumers will have to upgrade at some point. This isn't to pooh-pooh what are impressive sales figures; it's only to put some of them in in perspective before investors jump in with both feet.
As great as some of the retail numbers have been recently, there are better options out there. One of them is "The Motley Fool's Top Stock for 2012." It's a well-positioned emerging-market retailer that's set to profit from the growing middle class in one key emerging market. Read more about it by clicking here.
Andrew Tonner and Austin Smith have no positions in the stocks mentioned above. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford and General Motors. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.