Weakening global demand has cast a long shadow, but U.S. company earnings overall appear to be in good shape. For that, corporate America can thank the U.S. consumer. While earnings expectations have plummeted for industrial- and energy-related areas, such as oil and gas drilling, a broad array of consumer-focused companies, like home improvement and internet retailers, are generating stronger profits.
In fact, for the 12 months ended September 30, 2015, consumer spending rose 3.2%. And with household debt service at multiyear lows, wages rising and the employment picture improving, American consumers, which account for 69% of GDP, may just be getting started.
Of course, in today’s global economy no country is an island. Capital expenditures and net export growth have weighed on overall GDP. These headwinds will likely remain until conditions improve in China, Europe and elsewhere.
Companies across a wide variety of industries are exposed to rising consumption. These include home improvement retailers such as The Home Depot and internet retailers like Amazon. As American consumers flex their muscles, select businesses in these areas stand to benefit.
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