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Report: Consumer spending index rebounds in March

4/13/2010

New York City The Deloitte Consumer Spending Index, released Tuesday by Deloitte Research, showed upward movement in March, following two consecutive months of decline.

The Index attempts to track consumer cash flow as an indicator of future consumer spending.

“The improvement in the Index was primarily driven by the job market, as initial unemployment claims continue to trend downward from their peak one year ago. Tax rates, which were cut last year as a part of the government’s stimulus package, also moved downward,” said Carl Steidtmann, chief economist with Deloitte Research, a subsidiary of Deloitte Services LP, and author of the monthly Index. 

Steidtman added, “At the same time, declining real home prices remain a drag on the Index, although the double-digit price declines of a year ago have eased to the low single digits. Real hourly earnings have deteriorated slightly over the last several months due to rising energy prices.  Improvements in home prices and employment could potentially fuel stronger consumer spending activity in the months to come.” 

The Index, comprising four components -- tax burden, initial unemployment claims, real wages and real home prices -- rose to 4.47%, from a downwardly revised gain of 4.21% last month. 

“Consumers have shed some of their restraint in recent months, but it appears that a significant amount of pent-up demand may still be waiting to be released,” said Stacy Janiak, vice chairman and Deloitte’s U.S. retail leader. “As retailers plan for the critical fall selling season, they may want to consider the potential for a more active consumer. While value is likely to remain at the forefront of shoppers’ decisions, the quality of multi-channel experiences and service levels could be increasingly important as consumers choose where to open their wallets.”

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