Deloitte: Consumer Spending Index Up 2.15 Percent in July | SalesAndMarketing.com
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Deloitte: Consumer Spending Index Up 2.15 Percent in July

Overall spending grows for second consecutive month

The Deloitte Consumer Spending Index, which attempts to track consumer cash flow as an indicator of future consumer spending, rose 2.15 percent in July. This was steered by falling unemployment claims and tax burdens, along with a rise in real wages.

"The uptick in the Index may give retailers and their suppliers a reason for cautious optimism going forward, said Carl Steidtmann, chief economist with Deloitte research, in a statement.

Spending was fueled by a combination of positive changes in several economic sectors, including real wages, unemployment and taxes.

Real wages increased by 4.5 percent, up from relatively flat numbers experienced from May to June. The uptick largely correlated with continued deflation and falling prices.

Unemployment claims decreased for the fourth consecutive month. The sharp decline has been noted as a past indicator of economic recovery. Tax burdens also declined, following a distribution of tax rebates. Tax burdens are expected to continue in a downward trend for the next few months.

Real home price was the only factor that did not contribute to the upturn. Home values continued their year-over-year decline, despite lower prices and interest rates in June. However, the rate of decline has slowed. Government action to prevent additional foreclosures and offer tax credits as incentives to homebuyers helped to stall the drop, per the report.

Overall, the increases show that consumers do have the means to spend, according to a statement by Stacy Janiak, vice chairman and U.S. retail leader for Deloitte LLP.

A similar increase in consumer confidence could lead to further spending in the coming months, which is long-awaited news for retailers, Janiak said. "Retailers should be strategizing to more quickly adapt to changes in consumer buying patterns. In particular, use of advanced analytics to manage inventories and create pricing and promotion scenario plans could be an important catalyst in capturing greater market share and improving profitability this holiday season."