Deloitte Consumer Spending Index Stabilizes in November - SNEWS

Deloitte Consumer Spending Index Stabilizes in November

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.
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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 prices remain depressed, real wages rose in the most recent month due to the sharp fall in gasoline prices," said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP, and author of the monthly Index. "Real disposable income was up one percent in October and, with energy prices down even more in November, consumer purchasing power is increasing. However, the deterioration in the labor market continues to be a key concern."

The Index, comprising four components -- tax burden, initial unemployment claims, real wages and real home prices -- was unchanged at 0.10 percent.

"In this environment, it's important for retailers to keep a close eye on inventories, work closely with vendors and look for opportunities to better merchandise products that aren't moving in order to minimize promotions," said Stacy Janiak, vice chairman and U.S. Retail leader, Deloitte LLP. "The battle for the consumer wallet is extremely difficult this year and there will be winners and losers come January. Retailers should closely monitor those competitors that appear to be losing the battle and develop a game plan to manage through the short-term challenges and long-term opportunities as competitors stumble."

Highlights of the Index include:
-- Tax Burden: The tax burden continues to fall slightly with the
weakening of the economy.
-- Initial Unemployment Claims: Claims were largely unchanged from last
month but are up 45 percent from a year ago.
-- Real Wages: Real wage growth rebounded in the most recent month on
falling energy prices but are still down slightly from a year ago.
-- Real Home Prices: House prices fell by 11 percent from a year ago.
Home mortgage refinancing has all but disappeared, reducing household
cash flow. Inventories of unsold homes, while down slightly, are still
too high. A contraction in mortgage credit is limiting home buying.
Government purchases of securitized mortgage debt and other efforts to
stimulate mortgage lending could begin to help housing early next
year. Until home prices stabilize, housing will remain a major drag on
consumer spending.

For more information about Deloitte's Retail sector, please visit www.deloitte.com/us/retail. For more information about Deloitte's Annual Holiday Survey, including statistics, historical data and useful links, please visit www.deloitte.com/us/2008HolidaySurvey.

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.

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