Retail sales in the U.S. are growing at a 4.5% year-over-year rate, down from 8.3% in mid-2011, and real consumer spending is increasing by just 2.6% year-over-year, whereas a rate closer to 4% should be expected in the current economic conditions, Barron's reports. Moreover, while the consumer discretionary sector is up by 13% so far this year, 70% of gains have come from just four stocks: Inc. (AMZN), McDonald’s Corp. (MCD), Comcast Corp. (CMCSA), and The Home Depot Inc. (HD).

With unemployment at a 16-year low, wages headed upwards and household net worth now 37% above its peak during the housing bubble, consumers' spending restraint is unexpected, the report notes. Consensus forecasts of continued economic expansion led by consumer spending thus are in jeopardy.

Source: Barron's, Bloomberg

Brakes on Spending

One likely explanation for the slowing consumer spending may be the level of consumer debt, which now is at an all-time high. Loan delinquency rates are rising, indicating that consumers are increasingly unable to afford more credit. Also, while interest rates are low by historical standards, they are moving upwards, squeezing out marginal borrowers, Barron's observes. Meanwhile, economic expansion in the U.S. has become increasingly dependent on the expansion of credit, so any slowdown in borrowing now has a greater dampening effect on GDP growth, the report points out.

After the housing bubble and the 2008 financial crisis, consumers also have turned more serious about saving and more cautious about spending. Among members of the millennial generation, high student debt burdens are limiting their discretionary spending. Indeed, a Gallup study cited indicates that outlays on health care, housing and education have shot up from 25% of all national spending in 1980 to 36% in 2015, thus limiting more discretionary outlays.

Stumbling Consumer Stocks

Among automakers, shares of General Motors Co. (GM) are down by 0.2% for the year to date through Tuesday's close, while shares of Ford Motor Co. (F) are off by 5.6%, per Investopedia data. As a point of comparison, the S&P 500 Index (SPX) is up by 8.5%. (For more, see also: Pace of U.S. Auto Sales Slows; GM, Ford Shares Rise Anyway.)

Athletic apparel and footwear maker Under Armour Inc. (UAA) has plunged 30.4% so far this year. The bankruptcy of Sports Authority has cost Under Armour a major bricks-and-mortar outlet, while Dick's Sporting Goods Inc. (DKS) is offering cheaper house brand alternatives to customers. Dick's shares, meanwhile, are down by 25.9%. Casual footwear maker Skechers USA Inc. (SKX) has seen its shares stumble by 0.6%. Discount footwear retailer Payless Inc., operator of Payless ShoeSource stores, has been forced into bankruptcy. (For more, see also: Skechers Disappoints With Latest Guidance and Under Armour's New Retail Strategy: Saving Grace or Disaster?)

Department stores have been hurt by a combination of the uninspiring growth in consumer spending and the ongoing shift toward online shopping. Among the biggest losers, Macy's Inc. (M) is down 38.1% in 2017, JC Penney Co. Inc. (JCP) is off by 43.2% and Target Corp. (TGT) has fallen 22.9%. (For more, see also: Why Investors in Retailers May Bleed Even More.)