As we await the start of the World Series next week, maybe you think baseball is the national pastime. Nope. It’s shopping.

In the U.S., consumer spending accounts for about 70% of gross domestic product, providing the growth engine that has pulled the country’s economy out of most downturns for the past seven decades.

A quick disclaimer: I rarely set foot in retail stores. I hate to shop, even online. I simply don’t have the patience for it. My wife Carole does most of the shopping for our family. It’s a “hunter-gatherer” thing, I guess.

But as a financial analyst, I’m deeply aware of how retail shopping is vitally important for the economy and stock market — especially under today’s uncertain investment conditions.

Amid a host of risks, including trade war and a sputtering global economy, robust consumer spending has kept the bull market alive. However, signs are emerging that consumers are in retreat. And that could spell trouble for stocks.

The Commerce Department reported yesterday that U.S. retail sales fell in September, the first decline in seven months. Sales fell 0.3% and missed analysts’ expectations of a 0.3% increase (see chart).

A year ago, retail sales rose by 4.1%. Households last month cut back spending on motor vehicles, building materials, hobbies and online purchases.

The negative headlines about impeachment, strife in the Middle East, and trade war with China appear to be taking their toll on consumer confidence.

The three main U.S. stock indices all closed in the red Wednesday, as Wall Street’s fear of an economic downturn offset good news on earnings.

Market crosscurrents…

Investors are grappling with a good news/bad news scenario, from Brexit to corporate earnings to China.

On the bright side: U.S. stocks were poised to open in the green in pre-market futures trading this morning, buoyed by prospects of a Brexit deal.

British Prime Minister Boris Johnson announced a breakthrough deal Thursday with European Union negotiators that would allow Britain’s orderly withdrawal from the trading bloc. Details are yet to emerge and the agreement still needs to be ratified by EU leaders and Britain’s Parliament.

Not surprisingly, signs of political opposition in the House of Commons already emerged today. However, if a “soft Brexit” is indeed in the works and it gets approved, global investors would heave a sigh of relief.

Third-quarter earnings season is a source of contradictions. Consensus projections for Q3 earnings overall are negative, but the results from bellwether companies so far this week have been encouraging. Bank of America (NYSE: BAC) yesterday reported third-quarter earnings that beat expectations.

BAC posted earnings per share (EPS) of 56 cents from $12.1 billion in net interest income. The consensus expectation was for results of 54 cents and $12.2 billion, respectively.

Earnings are getting overshadowed, though, by persistent worries about a looming recession. It’s not just the unexpected dip in retail sales that’s unnerving investors. After last week’s faux truce in the trade war, tensions are heating up again between the U.S. and China.

The U.S. House of Representatives this week unanimously approved legislation backing pro-democracy protests in Hong Kong, a move that angered China and could lead to retaliatory measures. At the same time, analysts are taking a closer look at the supposed trade compromise announced last Friday and they’re starting to see a nothing-burger.

Read This Story: Stocks Volatile as Cracks Appear in Trade Deal

Heightening investor anxiety is the calendar. Wall Street has a superstitious fear of October. Although over the long haul the performance of stocks in October is roughly average, the epic crashes of 1929, 1987, and 2007 all occurred in this month.

Let’s examine the most recent crash. From Oct. 9, 2007 to March 9, 2009, the S&P 500 plunged 57%. We’ve enjoyed a decade-long bull market, but financial laws haven’t been repealed. Economies and markets go through cycles. If you’re in or near retirement, could your lifestyle withstand a portfolio decline of more than 50%? I didn’t think so. But there are ways to prepare for the worst, while still partaking of growth.

Turn to “essential services”…

One sector that looks appealing now: utilities. You don’t have to be an income investor to love dividend-paying stocks like utilities.

Utilities provide essential services that people need, regardless of economic ups and downs. That makes the sector recession-resistant. For more on the utility sector, click here.

Health care stocks make sense now, too. Doctors, hospitals and drug firms provide essential medical care that people can’t live without. Total health care spending in the U.S. in 2018 exceeded the gross domestic product of many countries, including Brazil, the United Kingdom, Mexico, Spain, and Canada.

Federal government statistics reveal that Americans spent $3.65 trillion on health care in 2018, an increase of 4.4% over 2017. That translates to $11,121 per person, by far the most among developed countries. Demographic trends are powerful tailwinds for health stocks, as aging populations around the world get older and sicker.

The stellar third-quarter earnings results posted this week by UnitedHealth Group (NYSE: UNH) underscores the appeal of the health sector. With a market cap of $224.5 billion, UnitedHealth is the largest health insurance company in the U.S.

UNH posted EPS of $3.88, beating the consensus estimate of $3.75. This compares to EPS of $3.41 in the same quarter a year ago. Over the last four quarters, the company has exceeded consensus EPS estimates four times.

Both the utilities and health care sectors are shrewd defensive plays suitable for the late stage of the economic cycle. However, utilities stocks have been on a tear this year, whereas health care is undervalued.

Weighing on health stocks has been political rhetoric from Democratic candidates for the White House, especially “Medicare-for-All” proposals. These single-payer schemes, reiterated at this week’s presidential debates, would hurt for-profit health care providers.

It’s my contention, though, that the populist posturing on health care probably won’t result in tangible legislation. That makes the health sector a value play in a broader market that remains overvalued.

Consumers may be in retreat, but as an investor you don’t have to follow suit.

John Persinos is the managing editor of Investing Daily. You can reach him at: mailbag@investingdaily.com