U.S. consumer confidence index for the month of September jumped to an 18-year high of 138.4 from 134.7 in August.

Increasing for three months in a row, the index came well above the consensus estimate of 132.7 and hovered close to the all-time high of 144.7 recorded in May 2000.

Present Situation and Expectation Indices Up

While the present conditions measure rose modestly to 173.1, consumer expectations gauge increased six points to 115.3. Rise in both metrics indicates that spending momentum is likely to remain strong and this is good news for retailers, especially as the holiday shopping season approaches.

A Conference Board survey also depicted that consumer’s outlook about the labor market was more upbeat. Of the total respondents, 45.7% said jobs were “plentiful.” According to Jennifer Lee, senior economist at BMO Capital Markets, “Knowing that the job market is strong, knowing that one has a regular paycheck, does wonders for confidence”.

Continued high level of confidence indicates that consumers are little worried about the ongoing and intensifying trade war.

Strong Expectations Indicate Sustained Economic Growth

Lynn Franco, Director of Economic Indicators at The Conference Board said that surge in the expectations index points toward economic growth of more than 3% for the remainder of the year.

In the second quarter, U.S. GDP grew 4.2%, almost doubling from a 2.2% increase witnessed in the first quarter and recording the strongest performance in four years.  Also, the Fed has raised GDP estimates and now expects it to rise 3.1% in 2018 and 2.5% in 2019, up from the June forecast of 2.8% and 2.4%, respectively.

4 Great Picks

Given the increasing level of optimism, consumers are likely to splurge this holiday season. So, adding consumer discretionary stocks to your portfolio looks like a smart option at this point.

Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or #2 (Buy) offer the best investment opportunities for investors.