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Deloitte Consumer Spending Index recovers

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Deloitte Consumer Spending Index recovers

Good sign for future economic growth.

The Deloitte Consumer Spending Index picked up in August, which may be a sign of better things to come. The Index tracks consumer cash flow as an indicator of future consumer spending.

"The uptick in the Index suggests optimism as retailers anticipate the all-important holiday shopping season." 

"A notable decrease in initial unemployment insurance claims helped push the Index up," said Daniel Bachman, Deloitte's senior U.S. economist.  "An improving labor market can be a boon to consumer confidence. If these trends continue, there is a strong likelihood that we could see an acceleration of economic growth in the latter part of the year."

The Index, which comprises four components – tax burden, initial unemployment claims, real wages and real home prices – increased to 3.96 this month from 3.70 last month.  

"The uptick in the Index suggests optimism as retailers anticipate the all-important holiday shopping season," said Alison Paul, vice chairman, Deloitte LLP and retail and distribution sector leader. "These economic fundamentals along with lower gas prices may encourage consumers to pick up their spending in the months ahead.  Retailers should take a closer look at inventory with this optimism in mind to get an early read on what's hot – both in store and online, in case they need to pull some last minute levers to replenish merchandise.  Retailers should also assess their cyber security levels as attackers may be especially motivated to be more aggressive during peak periods like the holiday season.  Retailers will not only need to be vigilant about suspicious activity, but prepared to quickly address and recover from any incidents."

Highlights of the Index include:

Tax Burden: The tax rate continues a steady hold at 11.7%, showing a marginal increase from the prior month. 

Initial Unemployment Claims: Claims decreased notably this month to 296,000, and furthermore were down 10.5% from the same period last year.

Real Wages: Real hourly wages increased slightly to $8.80 this month, a slight 0.3% up from the same period last year.

Real Median New Home Price: New home prices continue to fluctuate as they fell 3.8% from the prior month to $113,000.

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