The soaring shares of the nation’s two big home-improvement retailers are another sign that the economy is turning around.
Pent-up demand for appliances and other big-ticket purchases have shares of both retailers trading at about 19 times earnings from last year, according to an article in The Wall Street Journal.
An improving housing market also has spurred the financial turnaround for the two retailers. New home construction is starting to gather momentum after going dormant during the housing bust.
And it’s not just new homes. Americans also are spending more money to renovate existing houses.
Home-improvement spending shot up 4.3 percent compared to a year earlier in the three-month period that ended in November, according to the Census Department.
Sales of big-ticket items are getting a much-needed shot in the arm, too, with credit more easily available and unemployment rates trending downward.
These are some of the first indications that people are spending money again. Big-ticket items really drive the economy and it starts with companies that manufacture, assemble and ship the items to the consumers.
This is all more positive news for the economy and retailers.
Source: Wall Street Journal, January 2012