American citizens’ confidence in the U.S. economy increased for two months in a row. The conference board reported U.S. consumer confidence index for the month of August on Aug 28, which jumped to 133.4 from 127.9 in July. The index rose modestly in the month of July after falling in June.Notably, the August reading surpassed Reuters' economist expectations of 126.7 and is the highest since October 2000.

Economic Expansion, Spending Momentum to Continue

According to Lynn Franco, director of economic indicators at The Conference Board, “expectations, which had declined in June and July, bounced back in August and continue to suggest solid economic growth for the remainder of 2018.”

Proving him correct, the Bureau of Economic Analysis released the "second" estimate the next day per which GDP increased at an annual rate of 4.2% in the second quarter of 2018. The figure almost doubled from 2.2% increase witnessed in the first quarter and marked the strongest performance in nearly four years.

The high level of confidence indicates that consumers are little worried about the Trump administration’s protectionist trade policy, which has led to a trade war.

Notably, the present conditions measure climbed to an 18-year high of 172.2. The consumer survey report revealed that the majority of the respondents are looking to purchase big-ticket items including homes, cars and major appliances within six months. The consumer expectations gauge surged to a six-month high of 107.6. While a smaller share of respondents expects a surge in employment in the coming months, a number of them are positive on pay gains.

Rise in both these metrics indicates that spending momentum is likely to remain strong in the third quarter.

4 Solid Picks

At this stage, investment in consumer discretionary stocks seems to be a prudent move.

We have narrowed down our search to the following stocks, each of which has a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a solid expected earnings growth rate for the year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Summer Infant, Inc. SUMR designs, markets, and distributes juvenile health, safety, and wellness products. It currently sports a Zacks Rank #1. The company expects earnings growth of more than 100% for the current year. The Zacks Consensus Estimate for the current year improved 50% in the last 60 days.

Summer Infant, Inc. Net Income (TTM)

Summer Infant, Inc. Net Income (TTM) | Summer Infant, Inc. Quote

PCM, Inc. PCMI is provider of technology products and solutions. It carries a Zacks Rank #1. The company has expected earnings growth rate of 82.5% for the current year. The Zacks Consensus Estimate for the current year improved 12.9% in the last 60 days.