Real Time Economics: Which Industries Are Most Vulnerable to Consumer Shift?

June 3, 2009, 5:00 AM ET

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


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