The U.S. economy appears to be on solid ground. Unemployment is incredibly low at 4.1%, and wages are finally starting to rise.
On the surface, these facts point to a strong economy. However, if you take a more long term look on the situation, you can foresee inflation becoming a problem, and companies eating away at the recent gains from Trump’s tax return to be able to lift wages while at the same time keeping prices low.
In sectors such as retail and restaurants, price pressures are always a problem. Both sectors, in particular retail, are terrified over raising prices in fear that consumers will take their business elsewhere searching for the lowest price possible.
Consumer are used to fierce competition keeping prices lower, but some retailers may find themselves left with a choice between razor thin to non-existent margins, or operate at a loss in order to maintain customer loyalty. The latter approach is one that Amazon.com (AMZN) used for years while it was building its online empire, but brick and mortar retailers will find it more difficult.
Let’s take a look at five stocks to consider dumping as wages continue to rise.