Deloitte Consumer Spending Index Continues Upward in February

The Deloitte Consumer Spending Index rose in February, once again driven by strong growth in real wages and a decline in energy prices. The Index attempts to track consumer cash flow as an indicator of future consumer spending.
Author:
Updated:
Original:

NEW YORK-- The Deloitte Consumer Spending Index rose in February, once again driven by strong growth in real wages and a decline in energy prices. The Index attempts to track consumer cash flow as an indicator of future consumer spending.

"Falling oil prices and reduced tax burdens are giving consumers the wherewithal to spend. What they are lacking is the will to do so," said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP, and author of the monthly Index. "At the same time, real inflation adjusted home prices are still down nearly 9 percent from a year ago and are a drag on the Index. The rebound in the Index coupled with anticipated tax cuts point to a better selling environment for retailers this spring. However, a full recovery in consumer spending will likely have to wait for stabilization of the housing market."

The Index, comprising four components -- tax burden, initial unemployment claims, real wages and real home prices -- increased to 1.53 percent, from an upwardly revised gain of 1.27 percent a month ago.

"Despite increasing purchasing power, consumers are still generally holding back. They do, however, seem to be breaking out of their winter doldrums by cautiously spending on items like spring clothing and certain electronics," said Stacy Janiak, vice chairman and U.S. Retail leader, Deloitte LLP. "Understanding that consumers are spending selectively, retailers should consider sharpening the connections with their customers -- not just to drive traffic today but to build deep customer loyalty for the future."

Highlights of the Index include:

Tax Burden: The tax burden continues to fall with the weakening of the economy. Tax reduction that goes into effect in April will add to a further reduction in tax burden going forward.

Initial Unemployment Claims: Claims rose again in the most recent month and are up 72 percent from a year ago.

Real Wages: Real wage growth continues to post strong growth. Real wages are up 4.6 percent from a year ago and on an annualized basis are up 13.5 percent over the last six months as energy prices have given a big boost to consumer purchasing power.

Real Home Prices: Home prices continue to fall. Renewed efforts to forestall foreclosures coupled with a tax credit for home buyers may bring some stability to this market. The decline in home prices has made home buying much more affordable. What is lacking is mortgage financing.

For more information about Deloitte's Retail sector, please visit www.deloitte.com/us/retail.

About Deloitte

As used in this document, "Deloitte" means Deloitte LLP and Deloitte Services LP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

Related

Deloitte Consumer Spending Index Points Upward in July

NEW YORK -- The Deloitte Consumer Spending Index rose in July, steered by falling unemployment claims and tax burdens, along with a rise in real wages. The Index attempts to track consumer cash flow as an indicator of future consumer spending. "The uptick in the Index may give ...read more

Deloitte Consumer Spending Index Continues Positive Momentum

NEW YORK -- The Deloitte Consumer Spending Index (Index) rose in October for the fifth consecutive month, driven in large part by real wage growth. The Index attempts to track consumer cash flow as an indicator of future consumer spending. "The continued rise in the Index points ...read more

Deloitte Consumer Spending Index Stabilizes in November

NEW YORK -- The Deloitte Research Leading Index of Consumer Spending stabilized in November, primarily due to the drop in gasoline prices and the resulting rise in real wages. The Index attempts to track consumer cash flow as an indicator of future consumer spending."While home ...read more

Deloitte Consumer Spending Index Falls Due to House Prices, Labor Market

NEW YORK -- The Deloitte Research Leading Index of Consumer Spending fell in July, continuing the decline the Index has experienced since October 2007. The Index attempts to track consumer cash flow as an indicator of future consumer spending."House prices, which are down 10 ...read more

Deloitte Consumer Spending Index Up For The Fourth Consecutive Month

NEW YORK -- The Deloitte Consumer Spending Index rose again in September, hitting its highest level in two years. The Index attempts to track consumer cash flow as an indicator of future consumer spending. "The fundamentals of consumer spending continue to improve, giving ...read more

Deloitte Consumer Spending Index Turns Negative for the First Time Since 1980

NEW YORK -- The Deloitte Research Leading Index of Consumer Spending fell into negative territory in October, primarily due to substantial increases in unemployment claims and continued softness in the housing market. The Index attempts to track consumer cash flow as an indicator ...read more

Deloitte Consumer Spending Index Falls Again This Month

NEW YORK, -- The Deloitte Research Leading Index of Consumer Spending fell in September, mainly due to continued softness in the housing market and an increase in unemployment claims. The Index attempts to track consumer cash flow as an indicator of future consumer spending."Home ...read more

Deloitte Consumer Spending Index Falls to Lowest Level Since 2001, With Home Prices as Single Largest Drag

NEW YORK -- With house prices falling nearly 12 percent in March 2008 and unemployment claims increasing 9.8 percent in the same period, the Deloitte Research Leading Index of Consumer Spending (the "Index") has reached its lowest level since 2001.The Index attempts to track ...read more

Consumer Spending Seen at Important Turning Point as Deloitte Index Shifts From Positive to Negative

NEW YORK -- As economic conditions trend downward, consumer purchasing appears to be at an important turning point, the Deloitte Research Leading Index of Consumer Spending has found. "The Index turned from positive to negative in real growth terms in January, indicating a much ...read more