If you aren’t taking a lot of notes each day as an investor, you aren’t learning and getting better at the craft of making money in the markets. And to be sure, there were a lot of lessons for investors in 2021.
One lesson is the incredible resilience of corporate America in the face of surging inflation, labor shortages and COVID-19 pandemic uncertainty.
Nowhere is that view on display more than in the nearly 25% return for the S&P 500 (^GSPC) year-to-date. That gain reflects impressive earnings growth by companies — FactSet’s John Butters estimates earnings growth for S&P 500 companies will be a record 45% when it’s all said and done.
Next reminder, if you will, is that the U.S. consumer — even in trying times — is going to find some way to spend.
“Consumers are just relentless when it comes to consumption even if there might be inflation or there is a pandemic out there,” explained Ro, former Yahoo Finance managing editor.
To be sure, personal income and spending data out on Thursday serves a reminder to Ro’s observation.
Personal spending rose a solid 0.6% in November, slower than a 1.4% blistering pace in October said the Commerce Department. The personal savings rate of consumers continued to trek lower — it stood at 6.9% in November, compared to 12.6% in April.
Meanwhile on Wednesday, the Conference Board reported consumer confidence increased by a greater-than-expected margin in December, with the headline index at 115.8 during the month and higher than Bloomberg’s consensus estimates of 111.0.
Added Ro, “People, regardless of the dangers of what’s going on out there, they are going to try to figure out a way to live their life and consume and experience those experiences.”