by Jeff Reeves | September 6, 2012 11:57 am
According to California-based research group IBISWorld, Americans’ cash-conscious days are over. Make way for the big spenders!
The gist of a new report cited in the L.A. Times is that “nearly five years after the recession began, consumers are tired of cooking at home, residing in cheaper and older homes and driving leased vehicles.”
In short, we are sick of this frugal, penny-pinching nonsense. It’s time to throw out our pit-stained T-shirts and actually replace the dishwasher that requires us to scrub all the plates clean before putting them inside.
And it’s not just psychology — there’s data to back this up. Consumer sentiment and disposable income levels are gradually increasing, according to IBISWorld. And in the report, it’s noted that durable goods in particular are starting to see an updraft.
Revenue from new homes will also rebound 11.1% in 2012, the report says, and looking forward should see a 15.7% jump in 2013 and 16.5% jump in 2014.
That seems to wash with increased optimism in recent months over the housing sector, particularly the SPDR S&P Homebuilders ETF (NYSE:XHB) that is up over 40% since the start of the year. Major builders Toll Brothers (NYSE:TOL) and PulteGroup (NYSE:PHM) are up even more, with around 60% and 130% gains respectively.
IBISWorld then says the $167.9-billion industry will also help related businesses, such as furniture and appliance makers. That bodes well for companies like Whirlpool Corporation (NYSE:WHR), La-Z-Boy (NYSE:LZB) and Bed Bath & Beyond (NASDAQ:BBBY), which all deal in various home goods. La-Z-Boy and Whirlpool have doubled the market’s returns in 2012, while Whirlpool is up an impressive 60%.
Another area of strength according to IBIS World: About 12.4 million new vehicles are slated to be sold in 2012, with a $510 billion price tag for the entire industry. That includes not just big automakers like Ford (NYSE:F), General Motors (NYSE:GM) and Toyota (NYSE:TM) but also parts companies like Autozone (NYSE:AZO) and related businesses like car washes and repair shops.
The numbers seem to bear this out too. Auto sales were strong in August, with GM, Ford and Chrysler all reporting solid gains.
Also benefiting from spending will be restaurants, which can expect annual growth just under 4% on average through 2017, according to IBISWorld.
In short, this research group is expecting pent-up demand to burst forth in the coming months and years after a very frugal few years.
We’ll see if that comes to pass. Because all it will take is one more downturn to send consumers back into their shells, where they be driving beat-up cars longer and eating macaroni and cheese at home once more.
Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at firstname.lastname@example.org or follow him on Twitter via @JeffReevesIP.
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