Rising consumer debt in US will influence consumer discretionary stocks

New York

CONSUMER debt is rising. How Americans handle that load and how much cash they spend will determine the fortunes of an important stock sector.

Stocks that benefit from consumer spending - including those in categories such as cars, home furnishings, retailers and restaurants - have been very strong performers recently. Over the three years till December, consumer discretionary stocks returned more than 18 per cent annually, on average, according to S&P Dow Jones Indices.

But what does the future hold for this sector? On the positive side, unemployment rates continue to decline, wages have grown modestly among lower-income earners, and plummeting energy prices have given consumers more s…