With concerns about lingering high unemployment, budget deficits and the general malaise with regards to the U.S. economy, consumers aren't spending as much as they traditionally would. The Great Recession took thriftiness to new heights, and it seems that Americans are sticking with the will to save. Analysts at JPMorgan estimate that consumer spending to grow at an inflation adjusted annual rate of just 2.6% this through 2010. This number is far lower and weaker than during prior recession recoveries. With consumerism a major part of the American economy, investors do have the right to worry about what a "lack of spending" means for the fate of the U.S. financial system. In spite of this, a new breed of consumer is beginning to pick up the pieces and spend.

IN PICTURES: 4 Biggest Investor Errors

Developing and Emerging Markets to the Rescue
The newly-minted middle class in emerging nations is driving spending on beer, electronic goods and automobiles. Currently, there are about two billion middle class citizens within emerging markets, and they spend around $6.9 trillion each year. Analysts estimate that number will grow to nearly $20 trillion in spending over the next decade. A new report from McKinsey & Company found that middle class citizens of these nations seek to own both products by international brands and localized goods.

The decline in the greenback's value through the past decade has made U.S. goods cheaper for foreign consumers. To meet this increased demand, U.S. companies have been boosting their exposure to these nations. Harley-Davidson (NYSE:HOG), for example, is planning to start selling high-end motorcycles in India later this year. Exports from the United States have been growing steadily throughout the year, and the Obama Administration has set goals of doubling U.S. exports over the next five years. This increase could create nearly two million jobs.

Playing the Global Consumer
During the recession, developing market consumption surpassed United States spending for the first time, equating to nearly 32% of global consumption. This compares to 28% for the United States. To play this growing trend in increased world consumption, investors have several avenues to pursue. Large multinationals such as Colgate-Palmolive (NYSE:CL), which sells more toothpaste in Latin America than it does here, make good choices for portfolio. Investors can also use the wide swath of exchange-traded products to bet on the new consumers.

Investors wanting to play an overall growing consumer market can use both the iShares S&P Global Consumer Discretionary (NYSE:RXI) and iShares S&P Global Consumer Staples (NYSE:KXI). These two ETFs cover a wide swath of international and multinational shopping stocks. Both should do well over the longer term as more people in emerging markets begin to spend.

U.S. exports represented almost 26% of U.S. manufacturing shipments at the end of 2009. Shipments to emerging nations of industrial goods have pick of the slack of domestic demand. The Industrial Select Sector SPDR (NYSE:XLI) is still the best catch all investment for the industrial sector. Investors can use it to play the trend in U.S. global exports.

Already overtaking Japan as the second largest economy, China is set to become the largest by 2020. Increasing prosperity within its middle and upper classes has created a huge demand for luxury goods. Within five years, analysts predict that demand for luxury automobiles within China will increase to 800,000 cars annually. The Claymore/Robb Report Global Luxury (NYSE:ROB) follows 32 firms dedicated to high-end and luxury offerings, including LVMH Moet Hennessy Louis Vuitton (OTCBB:LVMHF) and Polo Ralph Lauren (NYSE:RL). The Global X China Consumer ETF (Nasdaq:CHIQ) can be used a Chinese-based play on growing consumption throughout the nation.

The Bottom Line
With worries about the health of the U.S. economy still persisting, the American consumer has kept his thrifty ways. However, a new crop of middle-class citizens in emerging nations is ready to pick up the slack. Investors wanting to play this growth of a new consumerism can do so with any of the exchange-traded products listed above. (For more, see Investing In China.)

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

Related Articles
  1. Economics

    India: Why it Might Pay to Be Bullish Right Now

    Many investors are bullish on India for all the right reasons. Does it present an investing opportunity?
  2. Stock Analysis

    Analyzing Altria's Return on Equity (ROE) (MO)

    Learn about Altria Group's return on equity (ROE) and analyze net profit margin, asset turnover and financial leverage to determine what is causing its high ROE.
  3. Investing Basics

    Building My Portfolio with BlackRock ETFs and Mutual Funds (ITOT, IXUS)

    Find out how to construct the ideal investment portfolio utilizing BlackRock's tools, resources and its popular low-cost exchange-traded funds (ETFs).
  4. Stock Analysis

    6 Risks International Stocks Face in 2016

    Learn about risk factors that can influence your investment in foreign stocks and funds, and what regions are more at-risk than others.
  5. Investing News

    Icahn's Bet on Cheniere Energy: Should You Follow?

    Investing legend Carl Icahn continues to lose money on Cheniere Energy, but he's increasing his stake. Should you follow his lead?
  6. Stock Analysis

    Analyzing Google's Return on Equity (ROE) (GOOGL)

    Learn about Alphabet's return on equity. How has its ROE changed over time, how does it compare to its peers and what factors are driving ROE for the company?
  7. Investing News

    Is Buffett's Bet on Oil Right for You? (XOM, PSX)

    Oil stocks are getting trounced, but Warren Buffett still likes one of them. Should you follow the leader?
  8. Investing

    3 Things About International Investing and Currency

    As world monetary policy continues to diverge rocking bottom on interest rates while the Fed raises them, expect currencies to continue their bumpy ride.
  9. Investing News

    Tufts Economists: TPP Will Reduce U.S. GDP

    According to economists at Tufts University, the TPP agreement will destroy half a million jobs in the U.S. by 2025.
  10. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
RELATED FAQS
  1. Should mutual funds be subject to more regulation?

    Mutual funds, when compared to other types of pooled investments such as hedge funds, have very strict regulations. In fact, ... Read Full Answer >>
  2. How do mutual funds work in India?

    Mutual funds in India work in much the same way as mutual funds in the United States. Like their American counterparts, Indian ... Read Full Answer >>
  3. Do ETFs pay capital gains?

    Exchange-traded funds (ETFs) can generate capital gains that are transferred to shareholders, typically once a year, triggering ... Read Full Answer >>
  4. How do real estate hedge funds work?

    A hedge fund is a type of investment vehicle and business structure that aggregates capital from multiple investors and invests ... Read Full Answer >>
  5. Are Vanguard ETFs commission-free?

    While some Vanguard exchange-traded funds (ETFs) are available commission-free from third-party brokers, a large portion ... Read Full Answer >>
  6. Do Vanguard ETFs require a minimum investment?

    Vanguard completely waives any U.S. dollar minimum amounts to buy its exchange-traded funds (ETFs), and the minimum ETF investment ... Read Full Answer >>
COMPANIES IN THIS ARTICLE
Trading Center