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Deloitte Consumer Spending Index Reaches an 11-Month High

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Deloitte Consumer Spending Index Reaches an 11-Month High

Retailers should benefit during the holiday shopping season.

According to professional services firm Deloitte, its Deloitte Consumer Spending Index reached its highest point in almost a year. The Index tracks consumer cash flow as an indicator of future consumer spending.

"The Deloitte Consumer Spending Index grew to reach the highest reading since November 2013," said Daniel Bachman, Deloitte's senior U.S. economist.  "November's number benefitted from improvements in real wages, house prices and the labor market. The fundamentals for consumer spending remain strong."

 "The fundamentals for consumer spending remain strong."

The Index, which comprises four components – tax burden, initial unemployment claims, real wages and real home prices – increased to 4.5 this month from 4.0 last month.

"Better economic conditions and an anticipated increase in overall holiday sales this year should help retailers end the year strong," said Alison Paul, vice chairman, Deloitte LLP and retail and distribution sector leader. "While Deloitte's 29th Annual Holiday Survey shows that half of consumers planned to begin shopping before Thanksgiving, 43% will do the majority of their shopping in December or later – a six percentage point increase over last year.  As a result, retailers should make sure they are fully staffed and stocked up late in the season.  Furthermore, with the length of this year's holiday shopping season essentially staying the same as last year, retailers may want to advance their promotional calendar, and therefore avoid any last-minute online shipping delays that they experienced last season.  In doing so, customers will remain satisfied especially as their gifts arrive in time for the holiday."

Other highlights of the survey included:

Tax Burden: The tax rate has been effectively unchanged from the last month at 11.8%. 

Initial Unemployment Claims: Claims took a big dip to 280,600 from 295,000 last month down 12% from the same period last year.

Real Wages: Real hourly wages were up 0.2% from last month and 0.8% from the same period last year, increasing to $8.86 this month.

Real Median New Home Price: New home prices increased significantly, rising 16.5% from the prior month to $128,000 and are 6.5% higher than the same period last year.

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