Deloitte Consumer Spending Index rises in May

New York – Improvements in real home prices, initial unemployment claims and real wages drove an increase in the Deloitte Consumer Spending Index last month. The Index, which comprises four components of tax burden, initial unemployment claims, real wages and real home prices, rose slightly in May to 4.27 from a reading of 4.12 the previous month.



The tax burden remained flat compared with the previous month but rose 2.26% from the previous year, while unemployment claims totaled 343,000, down almost 6% from May 2012. Hourly real wages moved up 0.4% from the same period a year ago, reaching $8.81, and real home prices climbed to $117,329, an 8.5% increase from the prior year.



"Three out of the four components of the Index contributed to an uptick in May and have stayed on a moderate and steady track of improvement over the past several months," said Daniel Bachman, Deloitte's senior U.S. economist. "The labor market has stabilized, and initial unemployment claims fell nearly 6% since this time last year, while real home prices continued to climb and real wages crept up."



However, Alison Paul, vice chairman, Deloitte LLP and retail & distribution sector leader, cautioned that weather can have an uncontrollable impact on consumer spending.



“Retailers should take a cue from the past year's weather as a reminder of the many volatile and unforeseen factors that may affect their sales,” said Paul. “Predictive modeling and scenario planning can help retailers prepare for potential business disruptions, which can have a profound impact as they head into their busy and profitable back-to-school and holiday seasons."