Consumer spending has slowed meaningfully over the past two years and especially here in 2024 as higher rates have started to bite consumers. Throughout 2022, retail sales growth ran north of 5%. In 2023, retail sales growth slowed to about 3.6%. In 2024, the average retail sales growth so far has been about 2.5%.
That will change over the next two years. Lower rates will help reawaken the consumer and unlock accelerated retail sales growth. We see retail sales rising by more than 3% next year and possibly more than 4% in the year after that.
As consumer spending reaccelerates in 2025/26, consumer stocks should benefit from strong earnings growth.
This post appeared first on Trades Of The Day.