Deloitte Research Leading Index Falls

New York City Deloitte & Touche USA LLP said Tuesday its Leading Index of Consumer Spending fell to a new low this month, driven by sharply higher inflation in November, combined with continued falling home prices.

“Increases in energy and food prices are reducing consumer purchasing power,” said Carl Steidtmann, chief economist with Deloitte and author of the monthly index. “Sharply higher inflation caused real wage growth to fall to close to zero percent this month and, combined with continued falling home prices, caused the consumer index to drop sharply. Higher inflation and unemployment are key risks for consumer spending capacity in the months ahead, and we continue to expect uncertainty in the early months of 2008.”

The index comprises four components—tax burden, initial unemployment claims, real wages and real home prices—and fell to 2.30%, from a revised gain of 2.61% a month ago.

“January sales will be significantly affected by gift-card redemptions and fresh winter merchandise, and will be critical to retailers,” said Stacy Janiak, Deloitte’s U.S. Retail Leader.