U.S. Economy Returns To Pre-Pandemic Level: 4 ETF Picks

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The American economy has been booming with growth exceeding the pre-pandemic level. This is especially true as GDP grew 6.5% annually in the second quarter, indicating the sustained recovery from the pandemic recession. Rapid vaccinations, business reopenings and trillions of dollars of government stimulus spending powered consumer spending and resulted in robust growth.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, climbed 11.8% in the second quarter after a 10.7% increase in the first quarter. The boost came from spending money on cars, food and beverages, and services like restaurants and accommodations. Business investment surged 8% year over year.

The amazing Q2 growth is likely to slow down in the second half of the year due to the fast-spreading Delta coronavirus variant all over the world. Per the recent reports from the Centers for Disease Control and Prevention (CDC), the Delta variant now accounts for 83% of new cases of COVID-19. According to the latest data by Johns Hopkins University, the United States is averaging more than 57,000 cases a day and 24,000 COVID-19 hospitalizations. There were 70,740 new cases on Jul 27 and 462 deaths.

However, many analysts still expect the economy to grow at a robust pace of around 7% for all of 2021. That would represent the strongest calendar-year growth since 1984 and a sharp reversal from last year’s worst 3.4% economic contraction in 74 years.

That said, most of the ETFs will likely benefit from solid Q2 GDP numbers. We have highlighted four funds with a solid Zacks ETF Rank #1 (Strong Buy) or 2 (Buy) that are expected to outperform in the days ahead.

Consumer Discretionary Select Sector SPDR Fund (XLY - Free Report)

Solid economic growth will have a positive impact on the consumer discretionary sector, which attracts a major portion of consumer spending. As such, investors could tap the encouraging trend in the basket form through the ultra-popular, XLY, which has AUM of $20 billion and an average daily volume of about 3.8 million shares. It charges 12 bps in fees per year and has a Zacks ETF Rank #2.

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