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Consumer Spending Index Slightly Dips

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Consumer Spending Index Slightly Dips

Deloitte’s October survey still suggests positive spending patterns.

The Deloitte Consumer Spending Index marginally dipped in October after two months of consecutive increases. The Index tracks consumer cash flow as an indicator of future consumer spending.

"The decrease in the real median new home price mainly contributed to the decrease in the Index this month," said Daniel Bachman, Deloitte's senior U.S. economist. "But the fundamentals behind consumer spending remain strong."

"The fundamentals behind consumer spending remain strong."

The Index, which comprises four components – tax burden, initial unemployment claims, real wages and real home prices – decreased to 4.1 this month from 4.4 last month.  

"Despite a slight dip in home prices, consumers appear to be poised for some strong spending this season with lower gas prices and employment gains strengthening their confidence, said Alison Paul, vice chairman, Deloitte LLP and retail and distribution sector leader.  "In fact, in our most recent consumer holiday survey, shoppers told us they plan to spend 13% more than last year.  And, in comparison to recent years, many will be shopping without a strict budget, which is good news for retailers hoping to up-sell or cross-sell more impulse prone shoppers. For retailers, the opportunity is there this year to provide in-demand products along with product complements and premium options. And of course, retailers should think about equipping their sales associates with information and ideas so they are sure to encourage customers to take advantage of additional offerings."

Highlights of the Index include:

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

Initial Unemployment Claims: Claims marginally decreased to 295,000 from 303,000 last month down 9.7% from the same period last year.

Real Wages: Real hourly wages were slightly down 0.1% from last month to $8.84 this month.

Real Median New Home Price: New home prices fell 9.8% from the prior month to $109,000. Prices are still 3.7% higher than the same period last year.

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