Which Industries Are Most Vulnerable to Consumer Shift?

By Phil Izzo American consumers are saving more, but in order to bring down debt they might have much further to go. An article in Harvard Business Review looks at what that means for the top 10 industries in the S&P 500. The U.S. saving rate hit a 14-year 5.7% in April, according to Commerce Department data released Monday, and many economists say this newfound thrift is here to stay. William Jarvis, an associate at a major investment bank in New York, and Ian C. MacMillan, a professor at the University of Pennsylvania’s Wharton School of Business, write in the Harvard Business Review that the consumer deleveraging is likely to be a slow and painful process. “It would take consumers 1.3 years to pay down existing debt with their current after-tax income, provided they spent that income on absolutely nothing else,” Jarvis and MacMillan write. “That means no purchases of clothes, food, coffee at Starbucks, or anything else for 16 months.” The authors list the top 10 S&P 500 sectors ranked from most to least sensitive to shifts in consumer leverage. 1: Consumer Discretionary 2: Consumer Staples 3: Information Technology 4: Financial Services 5: Utilities 6: Health Care 7: Energy 8: Telecommunications 9: Industrials 10: Materials