Variant Perception posted a couple of excellent charts on how rising rent and healthcare costs may impact consumer spending an related retail equities. Let’s tune in.
Retail Sales vs. Medical + Rental CPI Inverted
Consumer Discretionary Equities vs. Medical + Rental CPI Inverted
Whenever rental and medical costs have risen significantly in the past, they have led to a big decline in retail sales. Consumers will start cutting back spending on non-essential items in order to pay for medical care and housing.
Retail stocks are highly correlated to the ups and downs of same store retail sales. As you can see in the above chart, the S&P 500 Consumer Discretionary sector has fallen sharply when rental and medical costs have risen, notably in 2001-02 and 2008-09.
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