3 large & tempting fast-food stocks

Financial Journalist
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Reserve Bank of Australia research on the link between falling house prices and spending – the “wealth effect” – has useful clues for investors in consumer-discretionary stocks.

RBA governor Philip Lowe this week said lower property prices would most effect spending on cars and household furniture. Consumers were unlikely to cut spending significantly on clothes, food, health and other services in response to falling asset values.

My take is that homeowners, faced with declining property prices and stagnant wages growth, are deferring big-ticket items so they can maintain spending on regular services. They would prefer to keep eating out, buying clothes and having holidays rather than buy or upgrade their car or couch.

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