New York City Deloitte said Tuesday that its Consumer Spending Index experienced a third straight month of decline in July, due in large part to weakness in the housing market.
The Index attempts to track consumer cash flow as an indicator of future consumer spending.
“Real home prices had briefly picked up due to demand fueled by tax credits for home buyers, but prices have resumed their downward trend following the expiration of those credits and the housing market is now the biggest drag on the Index,” said Carl Steidtmann, chief economist with Deloitte Research, a part of Deloitte Services LP, and author of the monthly Index.
“Looking at other components of the Index in July, we see that tax rates, which had declined sharply during the recession, have basically held steady since the start of this year. Real earnings ticked up slightly, following five consecutive declines,” said Steidtmann.
The Index, comprising four components -- tax burden, initial unemployment claims, real wages and real home prices -- fell to 4.45%, from an upwardly revised gain of 4.63% a month ago.