A recovery in the US housing market will feed through in to more buoyant consumption, and going overweight consumer discretionary stocks is a good idea, explains J.P.Morgan's US managers Jonathan Simon and Greg Luttrell.
US household net worth is now higher than before the financial crisis, at around $80trn in aggregate in the fourth quarter of 2013, compared with $69trn in the fourth quarter of 2007. The cost of servicing household debt (debt payments as a percentage of disposable income) is lower than it has been for more than 30 years. Consumers are starting to feel good again, which is good for America as a whole, as consumption made up 68% of US GDP in the third quarter of 2013. Discretionary spend In fact, we are overweight the consumer discretionary sector, where our highest conviction ch...
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