It’s Time To Profit From The Consumer Spending Spree
I was looking at purchasing a new mountain bike recently, but I ran into a major problem… Every bike shop was fresh out. Not only that, but many bikes that I was looking at won’t even be available until 2022.
It’s not just mountain bikes either…
While my brother was able to snag a brand new KTM 350 (dirt bike), it was the last one in a 250-mile radius.
You’ll find a similar situation in nearly all corners of the consumer cyclicals sector. From mountain bikes to dirt bikes to side-by-sides to hot tubs to vehicles to homes… It’s a frenzy out there.
This all stems from a combination of supply chain issues from last year’s pandemic-induced shutdown, coupled with folks having a bundle of cash burning a hole in their pockets — thank you, stimulus.
To see what I mean, just check out the latest data from the U.S. Bureau of Economic Analysis:
As you can see, real disposable income (or extra cash folks have) saw a massive increase in its latest reading (March 2021).
It seems that these folks are taking that extra cash and spending it like there’s no tomorrow. For instance, April retail sales came in at a whopping 17.9% higher than in February 2020, before Covid-19 altered our economy.
If you simply read the headlines that said retail sales held steady, that’s because it was comparing April’s figures with the month’s prior, not year-over-year.
This rebound and growth in retail sales is the fastest gain for any 14 months since 1978-79. To put this into perspective, if Covid had never happened and retail simply continued to grow at its more normal 4.5% pace, then it would have taken until November 2023 for retail sales to reach where they were in April of this year.
In other words, this gargantuan leap in retail sales is two and half years ahead of schedule.
Will The Spending Trend Continue?
Back in March, my colleague Brad Briggs predicted that we would see “a personal spending boom”. But he’s not alone. Of course, the million-dollar question is how long can this record growth in retail sales go? One could assume that eventually the money folks saved up by not traveling and dining out — coupled with their stimulus checks — will run out sooner or later. Surely, this spending rate will run its course and retail sales will return to a more normal growth rate.
But again, it seems consumers are in good shape. Just take a look at the chart above again. Yes, they’re spending a lot, but they’re also paying off their credit cards instead of bloating them.
In the first quarter of this year, credit card debt shrunk by $49 billion, the second-biggest quarterly reduction ever. The largest decline was — unsurprisingly — in the second quarter of 2020 when it plunged $79 billion as folks were ordered to stay at home.
In short, we have trillions of dollars flooding our economy, some of which is landing in people’s savings accounts — which have also soared to record highs. This money is now burning a hole in their proverbial pockets, especially since they’ve paid down their credit card bills. We have brokerage and retirement accounts surging to new highs, and homes prices are soaring.
Action To Take
After a dismal summer of 2020, folks are feeling rich and ready to spend on everything from from sporting goods to golf clubs to vacations. And over at my premium services, we’re going to take full advantage of this tailwind.
My advice: focus your research on some of the lesser-known names in the retail shopping and personal consumption space. You’d be surprised what you find beyond the obvious large-cap names.
In the meantime, my team and I have also been focusing on the next frontier in tech: outer space.
You read that right. It’s not as crazy as it sounds — and it’s all thanks to Elon Musk’s latest project, named Starlink. It’s already rolling out across the globe, and it’s going to change the lives of millions of people (and make a killing in the process).
But there’s just one problem… It’s currently “off limits” to regular investors…
Fortunately, we’ve discovered a little-known “backdoor investment” that can get you in on the ground floor, TODAY. (Without this “secret partner, Starlink will never get off the ground…)