Deloitte: Spending Index Rebounds On Housing Market Gains

By Rob Starr, Content Manager, Big4.com

The Deloitte Consumer Spending Index (Index) tracks consumer cash flow as an indicator of future consumer spending. It rose  in September, primarily due to a nearly 11 percent increase in home prices, which offset weakness in other areas of the Index.

Personal income and spending data for August were disappointing. Real incomes dropped 0.3 percent while spending was up just 0.1 percent from the previous month. While overall spending is up 2 percent from a year ago, growth in the past three months has been tepid, falling 0.1 percent in June, rising 0.37 percent in July and increasing just .08 percent in August. The savings rate also fell from 4.1 to 3.7 percent in the most recent month. Energy prices remain an important factor. Gas prices usually decline in autumn as the summer driving season ends, but in a highly unusual turn, they have continued upward this fall.

Jobless claims moved higher this month to 371,000, and were 2 percent higher than this time last year. Rising energy prices sent real wages tumbling to $8.71 — the largest month-to-month drop since September 2005.

Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader commented:

“The ups and downs in housing, employment and energy costs may have given consumers pause this past month,” she said. “As the holidays get into full swing, however, we anticipate shopper enthusiasm will be renewed. Turning their attention away from politics after the election, consumers can get back to the business of shopping. Retailers should benefit from a predicted 3.5 to 4 percent increase in November through January holiday sales over last year, and non-store channels such as online, catalogs and interactive TV, are expected to increase 15 to 17 percent. In addition to generating non-store sales, retailers can lift brick-and-mortar performance by using digital channels’ influence to drive in-store traffic and conversion.”